Over the past three years, Best Buy Co. Inc. (NYSE: BBY) has not just survived but actually thrived. In this time, the company grew its brand into one of the biggest electronics retail chains. However, one analyst sees the rally stopping in the second half of 2015.

Merrill Lynch downgraded Best Buy to an Underperform rating and lowered its price target to $32 from $45. The brokerage firm believes that the company will continue to increase capital return and perform well relative to the industry, but if second half comparable sales (comps) are negative, shares could be at risk.

The firm noted a few reasons as well:

• Possible second half comp downside from a mixed product cycle.
• Continued reinvestment in the business offsetting strong cost cutting efforts.
• Limited catalysts to expand the multiple.

Over the past three years, under CEO Hubert Joly and CFO Sharon McCollam, Best Buy significantly strengthened its competitive position through investments in the store experience, omnichannel and tighter relationships with vendors. The company also benefits from strong product cycles in 4K TVs and appliances. However, Merrill Lynch believes that increasing weakness in computing, ongoing commodization and pricing pressure within tablets and stagnant mobile trends will pressure comps. This category represents 49% of sales, versus a combined 23% for TVs and appliances.

Merrill Lynch detailed its investment thesis as:

Best Buy has executed well on its restructuring & taken out costs faster than expected while carefully managing spending needed to deliver the turnaround. However with Best Buy entering a much more mixed overall product cycle, we see limited opportunity for comp growth. Further, share buybacks are likely to increase as a contributor to earnings but without better comp growth, shares and the multiple are unlikely to increase materially.

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Another result of this downgrade was lowered estimates from Merrill Lynch. The firm expects lower comps in second half of 2015 to -1.0% from 1.5%, and for 2016 and 2017 to 0.5% from 1.0%. Merrill Lynch adjusted its EPS estimates going forward: in 2015 to $2.45 from $2.62; in 2016 to $2.75 from $3.18; and in 2017 to $3.00.

Shares of Best Buy were down 6% at $32.78 Friday morning. The stock has a consensus analyst price target of $42.70 and a 52-week trading range of $28.80 to $42.00.

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