“We think that what’s going to happen here is that ultimately private equity buyers will balk at what is, in our view, a deteriorating business model with really no exit strategy,” he said.
Nagel has a “market perform” rating on the company’s shares, along with a $17 price target, which is slightly lower than its current price.
Best Buy’s vast retail footprint is one area that needs fixing, Nagel said. The company has roughly 1,100 stores — a big chunk of which are arguably too large and should be significantly smaller, Nagel said.
Despite these issues, Nagel said the company is still “the leading consumer electronics retailer in the world.” He predicted that its cash flow and profitability will likely hold for a while, given its underlying strength and ability to control costs.
—By CNBC.com’s Katie Little; Follow Her on Twitter@katie_little
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Brian Nagel does not own shares of Best Buy.