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Analyst: Selloff In Best Buy's Stock Due To Management Change

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Analyst: Selloff In Best Buy's Stock Due To Management Change

Investors and traders were heavily selling Best Buy Co Inc (NYSE: BBY)'s stock on Tuesday after the company reported its first-quarter results, provided second-quarter guidance and also announced a series of management changes.

The question many investors are asking is if the decline in Best Buy's stock price is due to the company's poor guidance or the departure of Chief Financial Officer Sharon McCollam.

Related Link: Best Buy Reports Better-Than-Expected Q1, But Shares Still Fall 5%

Speaking as a guest on CNBC's "Squawk On The Street," JPMorgan's Chris Horvers stated that the loss of McCollam should be troubling to investors.

According to Horvers, Best Buy actually reported impressive financial metrics, including a domestic comp that came in better-than-expected in the first quarter and a comp outlook that is ahead of its peers along with a "conservative" outlook.

Horvers continued that McCollam is "famous" among retail executives and was "the key architect" in Best Buy's turnaround and cost savings initiatives. As such, investors should be "concerned" with her departure.

Finally, the analyst suggested that if Best Buy can generate flat comps, buyback stocks and pay a dividend the stock would do just fine. However, this theory is put into question in 2017, as McCollam left the company and comps could turn negative.

At time of writing, Best Buy was down 6.06 percent at $30.99.

Posted-In: Analyst Color Earnings News Guidance Management Movers Media Trading Ideas Best of Benzinga

 

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