Should you invest in Best Buy shares in September 2021 after BofA upgrade?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Aug 25, 2021
  • Best Buy shares on Wednesday edged slightly lower despite receiving an upgrade from BofA.
  • The analysts cited its solid Q2 results, which triggered an 8.35% spike on Tuesday.
  • Best Buy trades at attractive valuation multiples despite this year’s 20% gain. Time to buy?

On Wednesday, Best Buy Co Inc. (NYSE:BBY) shares edged slightly lower despite receiving a rating upgrade from BofA analysts. The analysts cited its solid Q2 results in their upbeat statement, adding BBY’s exciting growth prospects in the mix.

Best Buy announced its most recent quarterly results on Tuesday before markets opened, beating analyst expectations on revenue and earnings. The company reported non-GAAP Q2 earnings per share of $2.98, beating the consensus Street estimate by $1.09. On the other hand, its GAAP EPS of $2.90 beat the average analyst estimate of $1.90, while revenue grew by 19.6% Y/Y to $11.85 billion, $310 million better than Street expectations.

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BofA analysts raised the BBY stock price target to $157 per share, up from $145. On the other hand, Jefferies analysts retained their buy rating and raised the price target from $136 to $145, while Wedbush now has a target of $130 from $125, previously.

Should you buy Best Buy shares in Q3 2021?

From a valuation perspective, Best Buy shares trade at a trailing 12-month P/E ratio of 14.24 and a forward P/E of 14.32, making the stock attractive to value investors. Moreover, analysts expect BBY earnings per share to grow by nearly 19% this year and at an average annual rate of about 9% over the next five years, meaning growth investors could also find it compelling.

Therefore, Best Buy shares could maintain the current upward movement to the foreseeable future amid the attractive valuation multiples and growth prospects. As a result, Wednesday’s slight pullback creates an exciting opportunity to buy.

Source – TradingView

Technical overview: Best Buy stock price prediction for September 2021

Technically, the Best Buy stock price seems to have recently made a bullish breakout from a gently ascending channel formation. However, Wednesday’s pullback prevented the stock from crossing to overbought conditions of the 14-day RSI, leaving room for more upward movement.

Therefore, investors can target extended gains at approximately $124.21 or higher at $128.52. However, if the pullback continues, the BBY stock could find short-term support at $116.39 before dropping to $108.08.

Bottom line: Why buy the BBY rebound?

In summary, although Best Buy shares spiked more than 8% on Tuesday, Wednesday’s pullback prevented it from crossing to overbought conditions. Furthermore, the stock trades at exciting valuation multiples, while offering compelling growth prospects. 

Therefore, the current rebound could continue further in the coming weeks until the stock price hits the key resistance levels in the intraday chart.

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