Best Buy to benefit from Sears bankruptcy, analyst says

The only unanswered question from Loop is the liquidation of Sears. Chukumba said the company believed the only thing that would prevent Sears from winding up "is the extended financing term of ESL Investments." ESL Investments is the hedge fund managed by former Sears CEO Eddie Lampert. It owns approximately 19% of the outstanding Sears shares, in addition to the 31% that Lampert holds personally, according to the latest FastSet deposit.

Loop particularly expects Sears to be liquidated following its bankruptcy filing, due to a historical precedent. "The vast majority of bankruptcy filings by major retail companies in recent years have resulted in liquidations," Chukumba said.

In the event of Sears liquidation, Best Buy may receive an additional increase of 47 cents per share in adjusted annual earnings of additional customers. The additional benefit would come even when Best Buy would compete with several other retailers for Sears and Kmart customers, according to Loop.

J.C. Penney and Walmart will also be looking for an acceleration of Sears pedestrian traffic, according to Gordon Haskett Research Advisors. The stores of these two chains have the closest stores to Sears after Best Buy. Haskett also felt that Kohl's, Macy's and Target should experience a rise in their sales.

Loop has a purchase price on Best Buy shares with a target price of $ 88 per share.

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