JPMorgan moved Best Buy (NYSE:BBY) down a notch in its coverage, changing its recommendation from Overweight to Neutral and cutting the firmwide price target to $76 from $99. The firm cited an increasingly challenging outlook for parts of Best Buy's business, particularly in computing, which accounts for more than 35% of the retailer's product mix.
The downgrade follows a period of weak stock performance. Over the past year the shares have delivered a total return of -20.1%, according to InvestingPro data, and the shares have declined notably over the most recent three-month stretch.
At the center of JPMorgan's concern is the computing category. The bank pointed to unusual memory market behavior, saying memory prices are expected to double. That dynamic, JPMorgan said, could erode computing unit demand even though computing has produced the most consistent same-store sales gains since the second quarter of 2024. In JPMorgan's view, the abnormal memory price environment introduces downside risk to what otherwise has been a relatively steady segment for Best Buy.
JPMorgan also highlighted a set of discrete factors in the coming quarters that may limit upside for the stock. The firm noted a potential uplift from Nintendo Switch 2 in the second quarter, which it estimates could add roughly 2.3 percentage points to comparable sales in that period, and called out the Windows 10 expiration in October as another event investors should monitor. Both items, JPMorgan said, create timing-related effects that could restrain growth in adjacent periods.
Macro and consumer-end demand dynamics also feature in the bank's view. With housing markets described as stagnant, JPMorgan expects continued softness in televisions and appliances, categories that together represent a meaningful portion of Best Buy's revenue mix - televisions account for just over 20% of sales, while appliances make up roughly 11%.
The television market, JPMorgan argued, is becoming more competitive as capability and price gaps narrow between budget and higher-end brands, a trend that could compress margins or reduce unit growth for a retailer like Best Buy.
InvestingPro data cited by analysts shows Best Buy retains a significant dividend yield of 5.84% and currently trades below its Fair Value, metrics that may interest income-focused investors who are less sensitive to near-term sales cycles.
Market watchers will have a fresh data point soon: Best Buy is scheduled to report quarterly results in 24 days, on February 26, a release JPMorgan and other analysts expect will shed light on the near-term challenges highlighted in their notes.
Other brokerages have taken a more positive stance. UBS reacted to Best Buy's recent results by raising its price target to $96 while keeping a Buy rating, pointing to a resilient business model as product innovation and consumer upgrades accelerate. DA Davidson reiterated its Buy rating with a $90 price objective, citing strong comparable sales driven by an emerging product cycle.
On the corporate side, Best Buy announced a quarterly dividend of $0.95 per share, payable in January 2026. The company also appointed Dylan Jadeja, CEO of Riot Games, to its board of directors. Separately, Balfour Beatty Communities named Jennifer J. Hill as President of its Military Housing business, effective January 2026. These leadership moves were noted alongside the financial commentary as part of recent company updates.
Investors considering the stock will weigh JPMorgan's more cautious forward view against continued income generation through the dividend and contrasting analyst opinions. The February 26 earnings release will provide additional data points to evaluate how the issues JPMorgan flagged - especially the computing segment and memory price dynamics - are playing out in Best Buy's results.