UPDATE: Citigroup Upgrades Best Buy to Neutral; Risk Reward More Balanced

Citigroup raises its rating on Best Buy

from Sell to Neutral and raises its price target from $18 to $21. Citigroup says, "Following a ~35% pullback since 03/24/2011 we are upgrading BBY to a Neutral from a Sell rating on our view of a more balanced risk reward at current levels. Our upgrade is driven by: 1) likely limited further downside given near trough valuations (currently 5.4X NTM earnings vs. 3 year average of 10.8X, and previous lows of 4.8X), 2) a moderation in the rate of pricing declines in the CE Channel, 3) a compelling FCF profile and 4) the recent departure of Chairman/Founder Dick Schulze increases headline risk around BBY screening well as a potential LBO target. 5) Headline risk also exists on the eventual announcement of a new CEO. Our target price is raised to $21 on ~5X our FY14 est." BBY closed at $19.40 on Wednesday.