Analysts: Buy GameStop Shares Now
Two analysts are urging investors to buy shares in game retailer GameStop prior to the company’s holiday earnings release next week.
Arvind Bhatia with Stern Agee and Leach, and Mike Hickey with Janco Partners said that all signs point to a strong holiday for Grapevine, Tex.-based GameStop. The firm will be announcing its earnings for the holiday period (November-December) on January 10.
The holiday was driven by sales of top-tier titles like Halo 3, BioShock, Call of Duty 4, Rock Band, Half-Life 2: The Orange Box, Guitar Hero III, Mass Effect, Assassin’s Creed and software for Nintendo platforms.
Hickey said the GameStop’s holiday period typically represents 75 percent of Q4 reported sales, which means that “the street is looking for $2.027 billion in holiday sales, or +17 percent year-on-year.”
He added, “We do not see any indications from management or the retail channel which would suggest video game weakness over the holiday, and expect their recently raised guidance will prove achievable and possibly conservative as it was in ’06.”
In November, GameStop raised full-year guidance in light of record $1.6 billion Q3 sales, forecasting earnings per share between $1.61 and $1.63 and total revenues to grow between 28 and 29 percent.
As of 11:08 a.m. EST, GameStop shares were $57.04, down $3.07, or 5.38 percent.
Bhatia and Hickey’s GameStop price targets are $65 and $68, respectively.