Another Wall Street firm has turned positive on Best Buy — making the case that an artificial intelligence-fueled upgrade cycle for PCs is hardly the only reason that investors should purchase the stock. UBS on Monday boosted Best Buy to a buy rating from neutral and lifted its price target on shares to $106 apiece from $85. That implies an over 21% gain from Friday’s close. The analysts cited “multiple paths to potential upside” for the stock including a rebound in housing, growing sales in newer product categories, and a broader electronics replacement cycle. Shares of Club name Best Buy have been on a tear lately — jumping more than 4% on Monday to intraday highs last seen in February 2023. The stock, which has gained roughly 24% over the past month, still has room to run to break its Covid-era record high of just under $142. The last personal computer boom was in the early days of the pandemic when people outfitted their home offices for work from home. BBY 5Y mountain Best Buy 5 years “I’m actually surprised it’s not up more on this upgrade,” Jeff Marks, the CNBC Investing Club’s director of portfolio analysis, said during Monday’s Morning Meeting. Marks said shares can eventually reach into the $100 territory as more AI-infused PCs and other innovative devices roll out, sending customers to the electronics retailer for the newest gadgets. We are currently reviewing our $95 price target for the Club. Coming on Tuesday, Microsoft plans to start selling new AI-enabled laptops at Best Buy, with roughly 40% of Copilot+ PCs exclusive to the retailer. We think that high-end offerings like these will give Best Buy a much-needed boost in sales and later for its stock price, too. Devices are part of how Microsoft and four other Club tech giants are targeting consumers to make money on AI. UBS agreed: “BBY has seen outsized performance in the past upon the introduction of products with truly differentiated features and tech changes.” In Monday’s note to clients, the analysts also said that Best Buy can get a “volume benefit from lowering prices on previous models of the same product.” The potential for an AI-driven device refresh cycle has been well documented, and we’ve been talking about it for months. However, UBS thinks a weak spot in Best Buy’s latest earnings report, home appliances, could soon get their own moment in the sun — not from AI, but from more people buying houses and needing to fill them up. It’s a trend we highlighted last week when two cooler-than-expected inflation reports gave Wall Street hope for a Federal Reserve interest rates cut, or maybe even cuts, before year-end. Lower borrowing costs mean cheaper mortgages. “We estimate 40%-45% of Best Buy’s assortment holds a moderate to strong correlation to housing turnover,” the analysts wrote, citing offerings like its home appliances and home audio equipment. “With BBY’s recent comments that sales trends of TVs and major appliances have begun to improve from 1Q, we expect…
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