Skip to main content

Best Buy on the climb


New York City One chain’s demise may portend another’s rise. A Wall Street analyst has upgraded Richfield, Minn.-based Best Buy, citing bigger profits ahead based on the company’s absorption of defunct Circuit City’s customer base.

On Tuesday, Jefferies & Co. analyst Daniel Binder upgraded Best Buy to “buy” from “hold” and said Best Buy wound up with a bigger chunk of Circuit City Stores’ market than expected. Binder also said he sees bigger profits for Best Buy in the 2010 fiscal year.

Since the week of March 9, at least two other analysts have also noted Best Buy as a stock pick, citing its competitive advantage from the shutdown of the remaining 567 Circuit City stores earlier in March.

Best Buy may take as much as 50% of Circuit City's market share, Binder said, boosting its fourth-quarter and first-quarter sales and earnings, especially as the company has been aggressively cutting costs and delaying expensive projects.

Binder also upgraded Target, Home Depot, Costco and Kohl's to “buy.”

Banks are starting to be more willing to lend to consumers and businesses, Binder said, and a macroeconomic recovery may be looming, with retail earnings recovering.

This ad will auto-close in 10 seconds