Impact From Samsung Issues Should Be Muted For Best Buy, GameStop

Issues with Samsung Electronic’s SSNLF Note 7 are unlikely to have a significant impact on either Best Buy Co Inc BBY or GameStop Corp. GME, SunTrust’s David Magee commented.

Best Buy

Analyst Magee mentioned that Best Buy should be able to “shrug off” Samsung’s Note 7 woes without any earnings disruption, since the company has other consumer options. He added that Best Buy would continue to leverage its “strengthened competitive position” during the holiday season this year.

Best Buy has introduced certain products, especially VR, which are “ideal for customers to try out in stores.” Magee reiterated a Buy rating on the company, noting its low EV/EBITDA of 5.0x.

GameStop

The impact of Samsung’s Note 7 issues is likely to be muted for GameStop as well and would likely not translate to a meaningful shortfall at the company’s mobile stores, since most customers will simply choose different models, the analyst stated.

“Sony’s VR headset hits stores tonight—we think the buzz has been growing and initial allocation is already “spoken for.” NPD on Thursday night won’t be pretty (title comparisons) but is largely reflected in estimates,” Magee wrote. He maintained a Buy rating on GameStop, citing “current hardware introductions (including VR), GME’s early diversification success, the >5% yield and 3.5x EV/EBITDA.”

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