Back to top

Analyst Blog

We have maintained our long-term Neutral recommendation on GameStop Corporation (GME - Analyst Report) with a target price of $31.00, as risk reward remains fairly balanced for the stock at this juncture.

Why the Reiteration?

GameStop is well positioned to take the advantage of the growing market for video game products and PC entertainment software. The company’s strategy is to evolve through store expansions in favorable localities, by providing the largest title collection of video games and by leveraging its first-to-market distribution network to offer the latest hardware and software releases.

The company holds a significant position in the used video game products market and provides a greater selection of used video game products for both current and previous generation platforms. This has largely helped the company to remain afloat amid the challenging environment as the market for used video game products has been resilient to the recent economic downturn.

Despite these positives, GameStop forecasted a tough first half anticipating lower sales. The company expects a sales decline of 6% – 8.5% for the first quarter of fiscal 2013 with comparable-store sales to decrease between 5.5% and 8%. For fiscal 2013, the company expects sales to remain flat or decline by 8%, and comparable-stores sales to be in the range of negative 6% to positive 1.5%. 

Further, the video game industry is highly competitive, and video game shoppers now have many alternatives to buy software, hardware, and game accessories for video game systems and personal computers.  Alongside, retail heavyweights such as Wal-Mart Stores Inc. (WMT - Analyst Report), Target Corporation (TGT - Analyst Report) and Best Buy Co., Inc. (BBY - Analyst Report), have entered the video game market. It is apprehended that these larger retailers could dent GameStop’s sales and margins.

Currently, shares of GameStop maintain a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%