11:28 AM EST, 11/27/2024 (MT Newswires) -- Best Buy ( BBY ) faces a "choppy" demand environment, although there's likely a "compelling" path ahead for the electronics retailer's shares, UBS Securities said in a note e-mailed Wednesday.

On Tuesday, the company lowered the top end of its full-year earnings outlook and cut its sales guidance after its fiscal Q3 earnings and revenue came in below market expectations amid softening consumer demand.

"The swing in comp sales trends from down 4.5% in October to [up] 5% in the first three weeks of November demonstrates just how volatile the demand backdrop is today," UBS analysts Michael Lasser and Dan Silverstein said in a note to clients. "Stepping back, [Q3] results don't change our view that demand for [consumer electronics] products will eventually recover, along with BBY's top-line."

Best Buy's ( BBY ) fiscal Q3 gross margin growth demonstrates that its "profitability enhancements are more durable than skeptics thought," the analysts said. "This piece of the model is holding strong."

UBS expects the company's projected sales recovery to lead to a "healthy profitability improvement," according to the note.

The brokerage reduced its price target on the Best Buy ( BBY ) stock to $115 from $123 while maintaining its buy rating.

Price: 88.44, Change: -0.04, Percent Change: -0.05