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Tags: Best-Buy | Downgrade | TV | Trends

Best Buy Shares Fall on Downgrade Amid Slowing TV Trends

Tuesday, 10 August 2010 03:43 PM EDT

Shares of electronics seller Best Buy Co. fell Tuesday after a Goldman Sachs analyst downgraded his rating on the company to "Neutral" from "Buy."

Analyst Matthew Fassler said TV sales continue to be sluggish and prices continue to decline, hurting Best Buy's net income.

Electronics are cyclical because new products enter the market at high prices but competition soon drives prices down. Price cuts cut into Best Buy's margins.

Flat-screen TVs are at the price-cut stage of the cycle, while new higher-priced technology such as 3D TV has not yet caught on with most shoppers.

Fassler told investors he had expected a solid year for Best Buy, driven by new technology and healthy average selling prices due to limited capacity, good demand for high-end products and sales strength in emerging markets offset price drops.

But that hasn't happened, he said, as TV sales remain weak.
"Instead, we now model more subdued unit trends and steeper price declines," he wrote.

The shares fell $1.07, or 3 percent, to $34.51 during midday trading. The stock has traded between $32.81 and $48.83 during the past 52 weeks.

© Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


InvestingAnalysis
Shares of electronics seller Best Buy Co. fell Tuesday after a Goldman Sachs analyst downgraded his rating on the company to Neutral from Buy. Analyst Matthew Fassler said TV sales continue to be sluggish and prices continue to decline, hurting Best Buy's net...
Best-Buy,Downgrade,TV,Trends
184
2010-43-10
Tuesday, 10 August 2010 03:43 PM
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