Wedbush Expects Solid Q3 Results For GameStop

In a report published Monday, Wedbush analyst Michael Pachter reiterated an Outperform rating and $60.00 price target on GameStop Corp. GME. In the report, Wedbush noted, “We expect Q3 results at the high-end of guidance. Our estimates are for revenue of $2.28 billion, comps of up 5%, and EPS of $0.66, versus consensus of $2.21 billion and $0.61, and guidance for comps of up 1 – 5% and EPS of $0.58 – 0.64. According to NPD, quarterly hardware dollar sales were up over 100% (we modeled GME at up 53%) and software dollar sales were down roughly 30% (we modeled GME at down 20%), resulting in roughly flat growth. We believe GameStop gained software market share from hardware strength, and drove comp upside from mobile and digital growth. Estimated implied 2H:14 revenue guidance for Technology Brands is $245 – 295 million (versus $130 million in 1H:14 and $63 million in 2H:13), with non-GAAP digital at $442 – 464 million (versus $369 million in 1H:14 and $399 million in 2H:13). Positive contributors to EPS are expected to include mobile and digital, as well as share repurchases (over $150 million in recent months). On November 12, GameStop announced a $0.33 quarterly dividend (unchanged) and a new $500 million share repurchase authorization.” GameStop closed on Friday at $44.40.