Wedbush Maintains Outperform On GameStop Following Solid 2Q14 Results


In a research report published today, Wedbush analyst Michael Pachter maintained an Outperform rating on GameStop (NYSE:GME) with a $60 price target, following the company’s second-quarter results that beat Street expectations. 

Pachter noted, “Sales were $1.73 billion vs. our estimate of $1.70 billion, and consensus of $1.65 billion. New HW sales were up 124.8%, vs. our estimate of up 83.6%, and domestic industry growth of 101.8%,according to NPD. New HW strength was driven by Microsoft’s Xbox One and Sony’s PlayStation 4. New SW sales were up 15.6%, vs. our estimate of up 6.6%, and domestic industry growth of 8.5% according to NPD. New SW strength was the result of new releases, most notably Nintendo’s Mario Kart 8, Sony’s The Last of Us Remastered, and Ubisoft’s Watch Dogs. EPS was $0.22, vs. our estimate of $0.22, consensus of $0.18, and guidance of $0.12 –0.20. Comps were up 21.9%, vs. our estimate of up 19.0%, and guidance of up 12.0 – 19.0%.”

In closing, the analyst added, “Our PT is based on 13x our FY:15 EPS estimate. Although many quality retailers trade at 20x EPS, we believe GameStop faces headwinds from digital and the console transition.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Pachter has a total average return of 0.4% and a 47.3% success rate. Pachter has a -7.7% average return when recommending GME, and is ranked #1967 out of 3257 analysts.

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