UPDATE: Needham Upgraded GameStop

In a report published Friday, Needham analyst Sean McGowan upgraded

from Hold to Buy and announced a $60 price target following third quarter earnings. McGowan noted that $1 billion in sales of GTA V in three days exceeded the most bullish of estimates as SSS grew 20.5%. GameStop's initial results for the highly publicized debut of Sony's PS4 and Microsoft's Xbox One also appear promising. The analyst added, "Although sales of products tied to the previous generation of consoles will likely continue falling, and we believe that this “new” generation will not reach the same levels of consumer penetration as the last one (because of alternative gaming channels), we believe the next several years should see GME post very strong sales and profit growth." Needham examined the growing digital and mobile business, strong cash prospects, and strong management. He further commented on the success of GameStop's buy, sell, trade program emphasizing customers' $2.0 billion of "credits." The analyst continued, "These credits are bound to be used to buy new products, and (obviously) will be used at the GameStop stores. More than that, the database of what its customers have in their personal inventories (i.e., what games were recently bought, new or used) allows GME to tailor its promotions more effectively. And, as seen in the most recent quarter, it can modify the economics of the used business to drive market share – the company gave customers higher-than-average credits for used games leading up to the current console launch, in order to capture greater share of sales of launch hardware." GameStop closed at $49.90 on Thursday and is currently trading up 2.23%.