JP Morgan Comments on Best Buy's 4Q Margin Issues

JP Morgan released a research report this morning, in which it reiterates its Neutral rating on Best Buy

and lowers its price target from $30 to $28. JP Morgan analysts contend that "the issue that consistently resurfaces for BBY is the challenges it faces in simultaneously driving sales while maintaining margins. In 2Q, sequential comp weakness combined with gross margin pressure and investment spending to drive operating income dollars down nearly 30% YOY. From our view, these dynamics underscore the issues facing BBY – slower innovation, greater competition (particularly from the online channel), and a rapidly evolving business model." Best Buy closed at $23.35 yesterday.