Tomahawk, WI 08/26/2014 (Basicsmedia) – Persistent weakness in purchasing trends of consumers in the electronic sections has been a major headwind for Best Buy Co Inc. (NYSE:BBY) heading into the release of Apple Inc. (NASDAQ:AAPL)’s iPhone 6 this September. In an interview on CNBC, Peter Keith, analyst at Piper Jaffray said he expects the release of iPhone 6 to be a turnaround for Best Buy, in terms of sales.
The growth of Best Buy Co Inc. (NYSE:BBY) in terms of sales according to Keith has been limited’ by the fact that the product refresh cycle shrunk with no devices forthcoming from the likes of Samsung Electronics and Apple Inc.(NASDAQ:AAPL). The analyst expects the release of Apple’s next flagship device to contribute a good percentage to Best Buy’s second half sales having suffered a great deal during the first half of the year.
“iPhone 6 speculated to come out mid-September, we think it is a pretty big deal. We look at the potential unit number.[…] we put about a 10% market share that Best Buy Co Inc. (NYSE:BBY) is going to get in the U.S. on that. We think just given the new form factor it is probably about 1-2% same store sales benefit to best buy in the third quarter,” said Mr. Keith.
In terms of stock performance, 2013 was probably the best year for Best Buy as the stock enjoyed an impressive rally in the market in contrast to 2014 where performance has so far been lackluster, raising concerns as to whether the stock will spike, heading into the holiday season. Keith remains bullish on the stock maintaining an upward momentum nearing the close of the year, despite many people having skepticism about its ability to compete against a drop of competition from the likes of Amazon.com, Inc. (NASDAQ:AMZN) and Wal-Mart Stores, Inc. (NYSE:WMT).
“I think you can see it drift higher up to the high $30s. The stock was at $37 in January when they had a massive blow up of the Q4 numbers that terrible holiday sales release. Basically, there has been a tremendous amount of skepticism that Best Buy can’t control its own destiny that Wal-Mart and Amazon ultimately define what Best Buy Co Inc. (NYSE:BBY) is going to do. I Think that is a big over-exaggeration, said Mr. Keith.