Best Buy suffers analyst downgrade

US analyst firm Bear Stearns has downgraded consumer electronics retailer Best Buy from 'outperform' to 'underperform' as a result of narrowing profit margins and slowing sales growth.

According to a report on Bloomberg analyst Christopher Horvers is making the recommendation to clients despite Best Buy's rising profits in seven of the past eight quarters, and regardless of sales last month.

He is quoted as citing a "slowdown in the product cycle" which in turn hurts sales, and favours the larger stores that can discount on huge bulk orders.

Additionally, the sales boom that the videogames industry has seen in the past couple of months across a strong Holiday season could simply be "the last hurrah in the stock" according to Horvers.

US stocks are under pressure at the moment with continuing fallout over the subprime credit market as well as bad news in employment.

The company's share price has fallen from its one-year high of USD 53.38 a couple of weeks ago to USD 47.14 at the close yesterday, with a December sales report due later this week.