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
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
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%
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.