Best Buy shares are poised to rise over the next year due to growing demand for certain tech products, according to Goldman Sachs. The firm upgraded the stock to buy from neutral on Thursday and updated its price target to $85 per share, implying 21.1% upside from Wednesday’s closing price. The shares were up more than 2% in premarket trading Thursday. “We see the potential for a positive demand inflection to drive upside, primarily through multiple expansion,” said Kate McShane, an analyst at the firm. “We believe the company’s current valuation is not taking into account this potential inflection and is most likely factoring in broader concerns regarding the health of the consumer and potential near-term demand headwinds.” BBY 6M mountain Best Buy shares over the past six months “Our view for a potential inflection is supported by recent commentary surrounding stabilizing demand for certain tech products,” specifically, TVs and laptops, she added. “We see the potential for demand to stabilize and/or recover next year, supported by innovation and the upgrade/replacement cycle.” The note highlighted that such products that were purchased between 2020 and 2021 are approaching the early stages of what Goldman identifies as a three- to seven-year upgrade or replacement cycle. That cycle could help stabilize demand through 2024 if the broader consumer environment remains pressured, she said. Additionally, the electronics retailer has had several quarters of declining comparable sales, setting a “relatively low bar,” McShane said, adding, “this year could also be the low-water mark for margins.” “BBY is currently trading below historical averages on an EV/EBITDA (NTM) basis, and we see the potential for better-than-expected demand to be the catalyst for a multiple re-rating,” she said, referring to the ratio of enterprise value to EBITDA over the next 12 months. — CNBC’s Michael Bloom contributed reporting.