Best Buy Co. shares increased Monday after a Barclays analyst increased his price target and earnings estimates for the electronics retailer.
THE SPARK: Analyst Alan Rifkin increased his price target on Best Buy's shares to $50 from $38, his fifth price target increase so far this year. He also raised his 2014 earnings estimate to $2.75 from $2.65 per share on expected benefits from cost cutting. Rifkin's forecast is above the $2.70 per share that analysts polled by FactSet, on average, were expecting.
THE BIG PICTURE: Best Buy has been shuttering underperforming stores and revamping others to offset tough competition from discounters and online retailers. Under CEO Hubert Joly, the company has instituted a price-matching policy, opened more in-store areas for manufacturers such as Apple and Samsung and invested more to train employees.
Such measures are intended to prevent "showrooming," which is when people go to stores to browse products but then shop online for lower prices that has hurt Best Buy's performance in recent years.
Best Buy has also been working to improve its own website to help give it a competitive edge.
The company reported in August that its second-quarter income improved on lower costs.
THE ANALYSIS: Rifkin said in a research note that he believes further improvement is possible for Best Buy. He is optimistic about management's efforts to rein in costs while also developing creative ways to use store floor space. The analyst said that he believes the company will surpass its goal of cutting $725 million in costs.
The analyst has an "Overweight" rating on the company's stock.
SHARE ACTION: Shares increased 67 cents, nearly 2 percent, to $38.97 by early afternoon. Its stock remains at the upper end of its 52-week trading range of $11.20 to $39.28.