Best Buy (BBY) is expected to post a tough fiscal fourth quarter, dragged down by competition and a transition to other product categories such as apparel and beauty, UBS said Thursday, projecting a 2% decline in comparable sales.

The investment firm said in a note that the market views the retailer's Q4 sales trends as mixed, reflecting a more challenging-than-expected holiday season.

Analysts at the brokerage said Best Buy is poised to benefit from a continued device refresh cycle and product innovation, including Nintendo Switch 2, launches from Apple (AAPL), and smart glasses from Meta (META).

However, uncertainties around consumer health, tariffs and overall sales trends could lead the company to have a conservative outlook for full year 2026.

UBS expects the company to clock in full-year 2025 EPS closer to the lower end of the $6.25 to $6.35 guidance, ahead of its earnings call on Wednesday. It lowered its calendar year 2027 EPS estimates to $7.13 from $7.45.

UBS also maintained its buy rating but cut its price target to $85 from $96.

Shares of Best Buy fell around 2.5% in recent trading.

Price: 61.23, Change: -1.63, Percent Change: -2.59