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Deutsche Bank Doubles Down on Best Buy

Best Buy retail sales
Eddie Seal | Bloomberg | Getty Images)

This year, Best Buy has lived up to its name. With a gain of nearly 140 percent, shares of the electronics retailer have been on fire during the first five months of 2013, after the company was seemingly left for dead. So can the run continue?

Mike Baker says yes. He's the Deutsche Bank analyst who covers Best Buy, and on Friday, he reiterated his "buy" rating and increased his price target to $31 from $28.

For him, it's all about market share.

According to the trade publication This Week in Consumer Electronics, Best Buy sold $32.5 billion worth of consumer electronics in 2011, and $31.5 billion worth in 2012.

That means that out of the top 100 consumer electronics retailers, Best Buy's market share dropped from 24.4 percent to 23.7 percent, as Wal-Mart and Amazon both gained share over the course of a year in which the top 100 retailers saw sales drop by 0.3 percent overall.

But Baker believes that the bad trend for Best Buy ends here. "After three straight years of losses, we believe that BBY's investment in price competitiveness should begin to stem the tide of share losses in 2013."

In a Friday note, Baker goes on to contend that "outsized opportunities to cut costs should enable BBY to pay for more aggressive pricing to defend share."

On the other hand, Baker also cautions that "continued market share losses" are the No.1 risk to his bullish Best Buy thesis.

(Read More: Best Buy CEO Sees Turnaround Within His Control)

For his part, Mike Khouw of DASH Financial pointed out that Best Buy's incredible run could only be seen in a stock that served as such a bitter battleground between bulls and bears.

"This is one of those stories where the valuation was definitely cheap. But there was a battle going on between those who saw the stock as exceptionally cheap, and the theory that their business is in secular decline," Khouw told CNBC.com.

Deutsche Bank's call, then, is a wager that the decline has come to an end. Hence this analyst's theory that the stock is a bargain—even at a 52-week high.

_ By CNBC's Alex Rosenberg. Follow him on Twitter: @LilRosenberg

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