The investment case for Best Buy looks murky as retailers face a slowing consumer spending environment, according to Bank of America. Analyst Elizabeth Suzuki downgraded shares of the consumer electronics retailer to underperform from neutral, saying in a note to clients Wednesday that recession fears in 2023 threaten to put a damper on Best Buy's potential for positive earnings growth. The stock shed 3% following the downgrade. "We believe it is in a strong position in core products and should have opportunities to expand into new categories going forward, although a medium-term pullback on discretionary retail categories presents a headwind to both sales growth and valuation," she wrote. Best Buy shares have come under significant pressure this year as retailers grapple with high inflation and a pullback in consumer spending. The stock's down more than 17% year to date, with Bank of America's $69 price target suggesting shares could fall another 18% from Tuesday's close. Suzuki's price target suggests that stock trades at 10 times the bank's 2024 earnings per share forecast, which is below the historic averages for both Best Buy and the hardline retail sector. "We believe this discount is warranted given the pressure on consumer discretionary spending in light of inflation," she wrote. — CNBC's Michael Bloom contributed reporting
