12:56 PM EDT, 08/22/2025 (MT Newswires) -- Best Buy ( BBY ) is expected to deliver a fiscal second-quarter earnings beat, though there are concerns that potential price hikes could impact discretionary demand ahead, Wedbush Securities said Friday.

The electronics retailer is scheduled to report results Thursday. Wedbush projects earnings at $1.20 a share for the quarter, with potential upside to $1.27. Wall Street is looking for $1.08, the brokerage said in a note to clients. Wedbush expects consolidated comparable sales to drop 0.5%, which it said was in line with the consensus, with potential upside to 0.9% growth.

"While data points and read-throughs point to modest upside versus consensus, we see limited upside relative to buy-side expectations looking for a slight beat," Wedbush analysts, including Matthew McCartney, said. During the quarter, credit card panel data, store and web traffic, and category retail sales trended neutral to positive, according to the note.

Best Buy ( BBY ) shares were up 4.1% in Friday afternoon trade. So far this year, the stock has lost 12% in value.

Although a strong gaming release schedule for the second half, along with Switch 2 holiday demand, is expected to help lift sales in the near term, there are concerns about the impact price increases will have on discretionary demand, particularly on the "already stretched" middle-income consumer, the analysts said.

"We expect more pricing industry-wide in the (second half) now that the tariffs are becoming locked-in and pre-tariff inventories are depleted," the analysts wrote. "That's before taking into account possible tariffs on semiconductors that would ripple through nearly every facet of the industry."

In May, Best Buy ( BBY ) cut its full-year outlook due to the impact of tariffs after its first-quarter revenue fell more than market expectations. The company was "actively employing many tactics" in partnership with its vendors to offset the impacts of tariffs, with price adjustments as the "last resort," Chief Executive Corie Barry said at the time.

Wedbush expects the company to reiterate its full-year comparable sales outlook, which shows sales to be down 1% to up 1%. The brokerage reiterated its neutral rating on the retailer's stock, with a $70 price target.

"We do not see Best Buy ( BBY ) as well-positioned in an environment where consumers are trading down or out of discretionary categories," the analysts said. "Longer term, we see positive developments in the building product replacement and innovation cycle, and (Best Buy's ( BBY )) recent launch of a domestic marketplace that should accelerate sponsored ads growth over time."

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