Salomon Smith Barney downgraded Best Buy (BBY) to neutral from buy.
Analyst Bill Julian says he is downgrading on weak July sales and a deteriorating second-half outlook. He notes the company expects second-quarter comp-store sales to be slightly positive vs. its former 4%-5% growth estimate; the company also cut its second-quarter earnings per share guidance to $0.17-$0.21 from $0.30-$0.32.
Julian says the company cited poor consumer confidence in July for its sales shortfall, and is seeking ways to cut costs in the second half of the year, which implies continued weakness in Best Buy's outlook. He cut the $0.32 second-quarter earning per share estimate to $0.18, and cut the $0.35 third-quarter estimate to $0.30, as well as trimmed the $2.13 fiscal 2003 (Feb.) estimate to $1.95 and the $2.57 fiscal 2004 estimate to $2.30.