Best Buy (NYSE:BBY) shares dropped 4% on Monday after Goldman Sachs Group downgraded the stock from Neutral to Sell and set a price target of $59.
The downgrade reflects concerns about potential challenges beyond the first quarter, despite short-term support from stronger PC demand and higher consumer tax refunds. Analyst Kate McShane warned that rising memory costs are likely to push up laptop and computer prices after the first quarter, increasing the risk of margin pressure as consumers shift toward lower-priced alternatives.
She also highlighted the possibility of weaker shipment volumes, as manufacturers scale back output of consumer electronics.
According to McShane, Best Buy continues to face structural challenges in expanding its appliance and electronics segments, which could weigh on future revenue growth.
“While the stock is not necessarily expensive, we think we can expect to start seeing negative earnings revisions in the 2H of the year, which will drive stock underperformance,” she said.
The Sell rating underscores expectations that cost pressures moving through the supply chain will begin to impact demand and sales performance later in the year.