Apple, Inc. (Nasdaq: AAPL) is one of only a handful of companies which has a business so large that it meaningfully impacts other large-cap companies. Electronics retailer Best Buy Co Inc (BBY) has a lot riding on Apple’s business, and Apple’s blowout quarter and impressive forward guidance suggest Best Buy could be along for the ride.
Best Buy recently listed Apple as its largest vendor, and Deutsche Bank analyst Mike Baker says Apple could have an even larger impact on Best Buy’s sales than investors realize.
“Apple is Best Buy’s biggest vendor, accounting for at least 11 percent of sales, but more like mid- to perhaps high teens percent in our estimation, based on BBY’s disclosure that their top five vendors, with Apple at the top of that list, account for 53 percent of sales,” Baker wrote Wednesday.
Apple reported impressive sales growth on its major products across the board in the most recent quarter, including 1.6 percent iPhone unit growth, 14.8 percent iPad unit growth and 0.9 percent Mac unit growth. Best Buy sells all of these top Apple products, but Baker said the iPhone has had the largest historical impact on Best Buy’s stock.
Deutsche Bank estimates a 51 percent historical correlation between Apple’s iPhone unit growth and Best Buy’s domestic sales comparisons in the same quarter.
“Thus, given the accelerating unit and dollar trends in this category as well as the better than expected 13.4 percent in Americas revenue in total, we view this as a favorable read through for BBY,” Baker wrote.
Looking ahead to Best Buy’s second-quarter earnings report expected out on Aug. 29, Baker expects…
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