Sell Best Buy on Amazon and Costco competition, Evercore ISI says

A Best Buy electronics store is seen in Alexandria, Va.
Saul Loeb | AFP | Getty Images

Evercore ISI lowered its rating on Best Buy to sell from hold, due to the rising competitive threat from Amazon and retail discounters in the high-end television market.

"We believe BBY has benefited from two secular trends: a mix shift to smartphones away from CE [consumer electronics], and a shift towards higher margin large panel TVs and 4K TVs," analyst Greg Melich wrote in a note to clients Tuesday.

"With smartphones reaching saturation levels in the U.S. and our thesis that we are at the beginning of another channel shift in TVs towards discounters, clubs and online, we believe the risk-reward on BBY has shifted to the downside."

4K TVs have higher resolution screens with nearly 4,000 pixels in width compared to normal high-definition TVs at roughly 2,000 pixels.