Best Buy Co. Inc. (NYSE: BBY) is set to report its fiscal first-quarter financial results later this week, but will the retailer hurdle the bar? One key analyst thinks that these earnings will come up short.

Wedbush maintained its Underperform rating and its $29 price target on the shares, implying downside of 43.5% from the previous closing price of $51.33.

The firm believes that cost cuts and share repurchases have masked continuing revenue declines. Wedbush expects comp declines to persist due to a lack of compelling new products while the possibility of heightened competition is a constant threat to gross margin. With declining revenues and fewer cost cuts going forward, Best Buy has few levers other than buybacks to drive EPS growth in the 2018 fiscal year.

Looking at the results, Wedbush expects revenues to hit $8.30 billion and earnings per share (EPS) to come in at $0.40, compared with Best Buy’s first-quarter guidance for revenues between $8.2 billion to $8.3 billion and EPS in the range of $0.35 to $0.40.

Wedbush also expects domestic comps to be down 1.5%, versus guidance of −2.5% to −1.5%, as in-store traffic declines overshadow gains in online shopping and a slight tailwind from HHGregg’s bankruptcy. The firm expects international comps up 2.0%, compared with guidance of flat to up 3.0%, driven by store closures.

The firm detailed in its report:

We expect negative comps for the balance of the year, attributable primarily to declining pricing for virtually every revenue category, with consumer electronics particularly challenged. We also expect continuing store traffic declines, as online competition marches inexorably forward, with Amazon and Walmart increasingly competitive and capturing share. We expect price competition to intensify around Black Friday, and through year-end we expect greater online competition than the prior year.

In terms of the consensus from analysts, Thomson Reuters has estimates of $0.40 in EPS and $8.27 billion in revenue. The same period of last year reportedly had EPS of $0.44 and $8.44 billion in revenue.

Shares of Best Buy were last seen up 0.4% at $51.54 on Monday, with a consensus analyst price target of $48.10 and a 52-week trading range of $28.76 to $52.67.

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