Evercore ISI downgrades Best Buy as consumer electronics market comes under pressure

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Expect little upside to shares of Best Buy in the near term as deflation returns to consumer electronics, Evercore ISI said. Analyst Greg Melich downgraded shares of the retailer to in line from an outperform rating, saying in a note to clients Wednesday that he expects comparable store sales — a key metric for retailers — to turn negative into the new year. “In other words, two years of counter-normative inflationary support is now rolling off, and comes at a time when traffic is falling,” Melich said. “This is challenging for BBY and the rest of the CE industry.” Along with the downgrade, Evercore trimmed its price target on the stock to $70 from $80 a share, reflecting a 5% upside from Tuesday’s close. Shares are down 34.5% this year and sit more than 53% off their 52-week highs. “BBY is a well-managed company facing a compressing discretionary market unlikely to see much improvement into 2023,” Melich wrote. “Structurally, the company is prioritizing in all the needed initiatives to sustain operations beyond 2022. The key remains competitive positioning longer-term.” Shares slipped nearly 2% in the premarket. — CNBC’s Michael Bloom contributed reporting

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