JPMorgan says this stock is in "investors' blind spot"

Investing.com -- Analysts at JPMorgan have added Best Buy (NYSE:BBY ) to its "Analyst Focus List", saying that investors have under-appreciated how the electronics store chain could see a spike in demand in 2025.

In a note to clients on Friday, the analysts predicted that the company's performance is due to recover from COVID-era pressures and benefit from the rise of new computing products and a potential rebound in the housing market.

"[W]hile investors are rightfully focused on the lower-risk high-cyclical plays [...], we believe [Best Buy] sits in investors’ blind spot with replacement demand rising in 2025 given further time from the start of COVID, new computing technology in its early stages, and the sensitivity of TVs/appliances to housing turnover," the analysts wrote.

"We also note that vendors need [Best Buy], an important endorsement for quality investors looking for higher beta names with cyclical upside."

In August, Best Buy raised its annual profit forecast and reported better-than-expected top and bottom lines returns in its fiscal second quarter.

The firm posted quarterly earnings per share of $1.34, topping consensus estimates of $1.16, and generated $9.29 billion in revenue, slightly above the projected $9.24 billion.

Enterprise comparable sales declined by 2.3%, improving from a 6.2% decline last year and above the analyst expectations of a 3.17% drop.

International comparable sales were also down 1.8% versus the estimated drop of 2.22% and last year's 5.4% dip. US comparable sales also fell by 2.3%, better than the estimated 3.33% decline.

The gross margin came in at 23.5%, matching analysts' projections and up slightly from 23.2% the previous year.

Looking ahead, Best Buy raised its annual earnings per share guidance to $6.10-$6.35, up from the previous range of $5.75-$6.20 and above Wall Street forecasts of $6.08. However, the company lowered its full-year revenue outlook to $41.3-$41.9 billion.

Source: Investing.com