BBY is 23.38% above Average Target Price
Best Buy’s stock is up 1.65% today as it builds on the upward momentum it began on January 9th 2013. Since then, the stock price has soared 36.16%. Today it trades at $16.04, which is $3.04 higher than the $13 average target price forecasted by stock analysts (see below table). The stock price, however, is still below the highest target price of $18 that has been forecasted.
BBY Target Price
Yahoo! Finance
Best Buy’s stock has been climbing due to a possible takeover of the firm. The company’s founder and previous CEO, Richard Schulze is looking to take the company private. In December of 2012, BBY’s board gave Schulze a February 28th deadline to make his bid. After Schulze delivers his bid, the board will have 30 days to accept or reject the offer.
BBY Climbs 36.6% Since Jan 9, 2013
Yahoo Finance
Investors are not bidding up the stock price due to valuations or fundamental reasons. The rise is purely based on speculation that Schulze will indeed make a bid for the firm. From an intrinsic perspective, the company is facing a lot of headwinds. It continues to experience declining sales, as firms like Amazon are chipping away its market share.
In 2012, the stock declined by 49.96% (see below chart). As reported on CNBC, “Best Buy's shares have fallen sharply on two disastrous earnings reports that show cash and earnings falling, amid online market competition and a weak market for PC-based products. The prospect that Schulze decides to walk away from his takeover proposal might highlight the retailer’s struggles amid online competition from Amazon.com and Wal-Mart”.
In 2012, BBY Fell 49.96%
Yahoo Finance
Stock analysts have continued to reduce their revenue estimates for the company. Schulze currently holds over 20% of Best Buy's stock. But, in the event that he walks away from the deal, the company’s stock will most likely plunge.
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