Moving forward, Hottovy sees the closure of 30 to 40 percent of Best Buy’s retail stores as the best case scenario. He added that these savings should then be reinvested to boost the company’s price competitiveness and to enhance both Best Buy’s online and in-store experience.
The company has said it plans to cuts its retail locations more than the closing of 50 of its 1,100 locations that it announced five months ago.
Although Richard Schulze, Best Buy’s founder and former chairman, said earlier this month that he was interested in buying the company for $24 to $26 a share by teaming with private equity partners, Hottovy thinks Schulze would have to resort to a hostile takeover if he is going to succeed.
At this point though, Hottovy doubts that Schulze will take the hostile route and added that he has not heard many stories about private-equity backers looking to back the Best Buy story.
Still, Thomas called Best Buy “extremely inexpensive” and everything investors would look for on paper in a value stock.
“This should look very attractive to private-equity investors, and we think it could be a takeout candidate still,” he said.
—By CNBC.com’s Katie Little; Follow Her on Twitter @katie_little.
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R.J. Hottovy does not own shares of Best Buy. KeyBanc Capital Markets has an investment banking conflict with the companies mentioned in this article.