NEW YORK (Reuters) - Best Buy Co (BBY.N) shares rose to their highest level in two years on Monday after Credit Suisse gave a thumbs-up to the turnaround efforts of the world’s largest electronics chain.
Credit Suisse resumed coverage of Best Buy’s stock with an “outperform” rating and raised its price target on the stock to $40 from $32. Its shares rose as much as 7.7 percent to $29.44, their highest level since July 2011.
Under Chief Executive Hubert Joly, who took the helm last fall, Best Buy has been matching rivals’ online prices, dedicating more in-store space to faster-growing product categories such as smartphones and tablets, and investing in employee training and revamping stores.
“Best Buy is turning its store base from a cost liability to an offensive weapon,” analyst Gary Balter wrote in a note to clients, adding that he expects the turnaround efforts to “lead to over five dollars of earnings power.”
The company has also removed layers of management, cut jobs, closed some underperforming stores and decided to shed noncore assets such as its stake in a European joint venture with Carphone Warehouse Group CPW.L to lower costs.
Most recently, the retailer has been investing in its online business to make its website easier to navigate and to replace its decade-old search platform with one that will produce more relevant results.
“The store-in-store with suppliers helps solve an excess square footage issue, a superior in store service issue and pricing pressures,” he said.
Best Buy shares were up 6.7 percent at $29.16 at midmorning on Monday, off the earlier high at $29.44.
Editing by Jeffrey Benkoe and Matthew Lewis