Why BBY Could Power Through the Current Economic Crisis

Telsey Advisory Group lifted its rating on Best Buy to "outperform" from "market perform"

Tech retailer Best Buy Co Inc (NYSE:BBY) is up 7.8% to trade at $84.63 this morning, after Telsey Advisory Group lifted its rating on the security to "outperform" from "market perform." The analyst said the big box name will come out on top after the coronavirus pandemic, citing strong cash flow generation and a healthy balance sheet, and adding that a big shift to remote work will be a boon to Best Buy in the long term. Meanwhile, UBS lifted its price target to $80 from $74.

Not all analysts share this sentiment. In fact, J.P. Morgan Securities cut its price target to $85 from $90, and now BBY's 12-month consensus price target of $82.05 sits just below current levels. Plus, of the 18 analysts in coverage, 10 still say "hold," compared to just eight calling BBY a "strong buy," coming into today.

Options bulls, meanwhile, are beginning to come around to Best Buy. In the last 10 days, 1.96 calls were bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 74th percentile of its annual range, suggesting this preference for puts its unusual.

Today's move puts BBY above the $80 level, which is also home to the security's 2018 highs, where the shares have been consolidating since late April. While the equity is still languishing beneath its year-to-date breakeven, it boasts a solid year-over-year gain over 15%, with several of its recent pullbacks cushioned by the 200-day moving average.