Oppenheimer Upgrades Best Buy Co. to Outperform (BBY)

Oppenheimer is out with a research report this morning this morning, where it upgrades it's rating on Best Buy Co. Inc.

to Outperform, from Perform; it has a price target of $45.00 on the stock. The Oppenheimer analysts said that they are lifting their rating on BBY, despite the fact that the company's longer-term outlook remains uncertain. The analysts cited weaker demand in key categories, which is weighing upon sales and traffic at BBY and is rendering the chain's larger stores less productive. The near-term opportunity for BBY and its shares is, nonetheless, increasingly compelling, in their view. The analysts cited valuation and still-negative investor sentiment, which should help to create a floor in BBY shares, while the company's aggressive efforts to expand its Best Buy Mobile initiatives and its relationship with Apple position BBY well to capitalize upon accelerating gadget demand in the upcoming holiday shopping season. As for valuation, the analysts remarked, “Our new $45 price target (up from $38) reflects about 12x (vs. about 10x previously) our fiscal 2011 (Feb. 2012) EPS estimate of $3.65 (unchanged), a level that is consistent with the mid- to upper end of historical valuation parameters for BBY.”