Analysts Duke it Out Over GameStop (GME)
Analysts who cover GameStop (NYSE: GME) are currently up in the air when it comes to long, medium and short-term predictions about the company.
Prior to last week's E3 conference, the stock saw significance gains as anticipation and excitement over Microsoft's (NASDAQ: MSFT) Xbox One and Sony's (NYSE: SNE) PlayStation 4 previews seemed to have carried the stock to higher than expected levels.
But now that the smoke has cleared people are wondering, what's next for GameStop? The analysts in the business show some mixed views regarding the company's future.
One analyst was extremely optimistic on GameStop's short and long term prospects. They noted that he gave the company a Strong Buy rating and does not intend to change his stance. When asked about how Xbox One will affect GameStop's used game market, they said the play would have some negative restrictions. The analyst went on to comment that PlayStation 4's non-restrictive nature for used games would have a significant positive impact and would outweigh Xbox One negatives.
Another analyst had a completely differently take on the stock. They believed that Xbox One's restrictive nature would ultimately have a negative effect on the company in the long term. The analyst went on to note that Microsoft had an “inability to reach mass markets” in the way that Sony and the PlayStation 4 could. The analyst believes core gamers will carry the company's growth in 2014 but after that GameStop and its used game market will become a “hobby market.”
But yet another analyst, Scott Tilghman of B Riley & Co. had another differing view on the stock. His take was rather neutral. When asked about Xbox One's impact on GameStop's used market, Tilghman commented that the restrictions will have “no impact” on the company. He explained that Microsoft's restrictions allow only retail publishers, such as GameStop to rent out different games. He also noted that Microsoft might end up lifting this restriction.
Tilghman went on to say that gamers of this next console cycle would ultimately side with Sony's Playstation 4, and Microsoft is in need of a PR lift if it wishes to stay in line with expectations of the PlayStation 4. Overall, Tilghman believed that the introduction of these new consoles will increase games sizes and will ultimately favor GameStop's used market business.
GameStop closed Monday at $38.50.
Latest Ratings for GME
|Jan 2015||Pacific Crest||Upgrades||Underperform||Outperform|
|Jan 2015||Credit Suisse||Maintains||Neutral|
|Nov 2014||Bank of America||Maintains||Buy|
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