Q1 Earnings Beat Out Of Best Buy 'Possible' Amid Leverage From Market Share Growth

Best Buy Co Inc BBY is expected to report first-quarter earnings on Tuesday, May 24. Ahead of the report, analysts are anticipating earnings of $0.35 per share on sales of $8.29 billion. Expect the company to issue the results around 7 a.m. EDT.

Raymond James analyst Dan Wewer issued a note Wednesday morning which suggested earnings will be the next catalyst to impact the stock. The analyst said Best Buy beating estimates is "possible" based on "leverage from market share growth."

"The key issue facing Best Buy is whether or not sales in the CE industry will begin to stabilize. The available NPD data that overlaps with 65% of Best Buy’s revenues declined ~4.2% in CY16 and ~2.3% in CY15. Best Buy is growing share, reflected in domestic revenues outperforming the addressable market by 3.9% points during the past
two years. We see comp sales declining 1% during the next two quarters. Sales data from the Census Bureau indicates industry sales declined 0.5% during Best Buy’s F1Q period," Wewer said.

The Raymond James analyst highlighted "iOS 7 needs to be successful if Best Buy is to reach its FY17 revenue targets."

Ahead of the Tuesday earnings report, Wewer maintains a Strong Buy rating.