The new Best Buy Membership program will help the company plunge itself to compete with its peers in various markets.
The shares of American multinational consumer electronics retailer, Best Buy Co Inc (NYSE: BBY) closed 5.19% to $110.18 on Monday after analysts from Piper Sandler Companies (NYSE: PIPR) revised their price target on the stock citing the company’s new membership program. As reported by The Street, the analysts, Peter J. Keith and Robert A. Friedner were bullish on the new membership program the company introduced, a move they believe will place it on a positive growth trend per sales in the coming days.
“With the upcoming rollout of its new membership program, Best Buy Total Tech, BBY is quickly becoming one of our top ideas under coverage,” the analysts wrote, adding “With Total Tech launching in late October, we expect the new membership program to garner significant interest/sign-ups over the holiday season.”
The Buy Buy membership program has been dubbed by the analysts “as one of the most intriguing initiatives” launched by the company in the past five years.
“With the upcoming rollout of its new membership program, Best Buy Total Tech, BBY is quickly becoming one of our top ideas under coverage. Not only do we view Total Tech as one of the most intriguing initiatives BBY has launched in 5+ years, but also shares trade at 5-year lows on a relative basis, and near 5-year lows on an absolute basis,” Peter Keith added.
The analysts believe the new membership program can result in approximately 3% comparable sales growth lift and 5% to 8% EPS growth in 2022-2023. Per the review of the happenings in the company, the Piper Sandler analysts assigned a price target of $150, a price point that is higher than the stock’s 52-week high of $128.58.
Best Buy Membership Program: Plunging into Existing Competition
Retail and consumer businesses are known to roll in a number of initiatives primarily targeted at attracting new customers, as well as in serving existing ones. While the Best Buy membership program ranks as one of these initiatives, the consumer-centric model has long been utilized by competing e-commerce giants most notable of which is Amazon.com Inc (NASDAQ: AMZN) through its Amazon Prime program.
The new membership service will give subscribers priority service delivery bordering on exclusive member pricing as well as fast and free shipping. While the Amazon version costs about $119 per year, the Best Buy option is comparatively more expensive with about $199 for the same time frame. This expensive subscription is not a disadvantage, as it would help consumers shopping for more heavy gadget users to gain the best value for their purchases.
The new Best Buy Membership program will help the company plunge itself to compete with its peers in various markets. This development, as well as the company’s potential growth in earnings in the near future all bound to fuel its anticipated growth across the board.