Analyst: It's Time to Sell Best Buy Stock

Short sellers have been ramping up their exposure to the retailer, too

BofA-Merrill Lynch downgraded Best Buy Co Inc (NYSE:BBY) to "underperform" from "neutral," and slashed its price target to $50 from $70 -- a discount to Friday's close. The brokerage firm cited troubling industry trends and uncertainty around sales of Apple (AAPL) products. Additionally, the analyst in coverage said the big box retailer will likely miss current-quarter same-store sales estimates.

In reaction, BBY stock is down 3.2% at $53.44, fresh off a 15-month low of $52.10. This negative price action just echoes the equity's longer-term trajectory, with Best Buy shares off nearly 37% since their late-August record peak of $84.37. In fact, the security is on track to snap its four-quarter win streak, down 32.4% so far.

Options traders, meanwhile, have been buying to open calls over puts at a quicker-than-usual clip. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), BBY's 10-day call/put volume ratio of 2.15 ranks in the 98th annual percentile.

While some of this activity may be at the hands of vanilla options bulls, it's also likely shorts are using the calls to hedge against any upside risk. Short interest on BBY jumped 7.7% in the two most recent reporting periods to 21.22 million shares -- a healthy 8.8% of Best Buy's available float.