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Publication title: "Best Buy: The Big Box Fights Back"
This article takes a skeptical look at Best Buy (BBY), with the author asserting right out of the gate that the retailer "has its work cut out for it." Despite respectable growth in online sales, along with the success of its smaller-format Best Buy Mobile outlets, the author warns that BBY is still too dependent on its brick-and-mortar stores. Eventually, notes the article, the relatively high overhead of those "big box" locations will start to put a dent in BBY's bottom line, as consumers increasingly migrate to the online arena to purchase electronics. While the retailer already has plans to pare its physical footprint in the U.S., the author wonders whether those cutbacks will be sufficient to appease shareholders.
BBY has definitely emerged as a technical laggard, with the stock losing roughly one-third of its value over the past 52 weeks. This steady decline has been highlighted by resistance at the equity's 10-week, 20-week, and 40-week moving averages, which have collaborated to thwart all of BBY's rally attempts since mid-December 2010.
In light of this dismal price action, it's no surprise to find a preponderance of pessimism surrounding the shares. During the past 10 sessions, options players on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 1.69 puts for every call on BBY. This ratio registers in the 98th annual percentile, just two percentage points from an annual pessimistic peak.
In the same bearish vein, short interest ramped up by 22.8% during the most recent reporting period, and now accounts for a noteworthy 13.3% of the stock's float. Plus, Zacks reports that 16 out of 22 analysts consider BBY worthy of just a "hold" or "sell" rating.
While BBY has yet to show any signs of life on the charts, the one silver lining is the healthy amount of negativity priced into the shares already. The retailer certainly has a number of technical and fundamental obstacles to overcome, but at least Wall Street's expectations are set fairly low.