GameStop Corp. (NYSE:GME) shares tumbled nearly 11% today after the videogame maker pre-announced worse-than-expected preliminary third-quarter results driven by software weakness.

In reaction, Wedbush analyst Michael Pachter reiterated an Outperform rating on GME, while reducing the price target $30 (from $36), which implies an upside of 43% from current levels.

Pachter wrote, “We expect GameStop shares to continue to trade at a compressed earnings multiple until it can successfully reverse the decline in its core video game business. Once stability has returned and it has begun to deliver on the earnings growth promised by its new initiatives, shares could appreciate above the current roughly 5.5x P/E multiple, potentially to 7 – 8x.”

“GameStop lowered its guidance despite gaining software market share on physical sales. We believe that physical sales represent a majority (but only a portion) of total industry sales (physical and digital); it appears that the migration towards digital full game downloads has absorbed modest growth in overall industry sales, overwhelming any strides that GameStop makes on the declining physical front,” the analyst added.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Pachter has a yearly average loss of 4.0% and a 46% success rate. Pachter has a 15.3% average loss when recommending GME, and is ranked #3835 out of 4173 analysts.

Out of the 11 analysts polled by TipRanks (in the past 3 months), 6 rate GameStop stock a Buy, 4 rate the stock a Hold and 1 recommends a Sell. With a return potential of 49%, the stock’s consensus target price stands at $31.21