What Wall Street's Saying About GameStop

GameStop Corp. GME reported Q4 financial results Thursday and disappointed investors.

By Friday morning the stock traded at $38.62, down 0.44 percent.

Analysts commented on the stock following the release of the results. Below are highlights along with current ratings and price targets.

Pacific Crest - Outperform, $48 price target

"GameStop reported another disappointing holiday season and year. For the full year, same-store sales (SSS) grew 3.4 percent versus its initial guidance of 6 percent to 12 percent. However, results for FQ4 (Jan.) ended somewhat better than it reported as of its holiday update. SSS were -1.8 percent for FQ4 versus the Street estimate at -2.1 percent. EPS was $2.15 versus the Street at $2.16. Versus our estimates, hardware was a clear disappointment, otherwise segment results were in line."

Stifel - Hold, no price target

"Management did a good job explaining their viewpoint on 2015 versus consensus expectations. It's clear the industry remains pressured by (a) a steeper decline of old gen software and (b) softer new gen software sales. Bundling remains an issue. GME business model really works when consumers are in the buy / sell / trade mode getting into older consoles and that is just not happening right now. And bundling suggests vendors remain focused on pushing digital product to consumers. We look for more details on digital retention of customers who purchase bundled product. Do they switch back to physical product or remain digital customers? It just continues to feel like the gaming world has changed a lot versus the prior cycle – iPad for casual gamers, Steam for avid gamers, and platforms / publishers more focused on selling directly to the consumer."

Oppenheimer - Outperform, $45 price target

"GME remains very well positioned to ultimately capitalize on a new product cycle in the video gaming sector, in our view. Data show that in their early stages, video gaming product cycles are not linear. As the installed base grows, we expect new-generation software to eventually offset declines in prior-generation software. Despite seemingly downbeat market sentiment, we do not foresee investors looking beyond structural risks for GME until evidence of a cyclical upturn at the chain is clear. A few factors support our positive intermediate-term outlook for GME and its shares: 1) potential for GME to capitalize on new console introductions; 2) superior cash flow generation; 3) still-conservative intermediate-term EPS forecasts; 4) opportunity in digital and mobile areas; and 5) a compelling share valuation."

Wedbush - Outperform, $50 price target

"While we remain optimistic that GameStop can continue to gain share and grow, we acknowledge that FGD is becoming a larger part of the mix, and we expect GameStop to suffer from headlines each time a publisher or console manufacturer brags about increasing digital sales. We expect this issue to persist for several years, and believe that GameStop's only recourse is to continue to build its Technology Brands businesses, harvest cash from its video game business, and return it to shareholders. Based upon the plan set forth in its earnings call, GameStop expects considerable contribution from Technology Brands in the next several years, and with continued share repurchases, it appears likely to us that the company can continue to grow earnings."

Credit Suisse - Neutral, $42 price target

"The good news is that expectations are now being reset, and there are some positives included within the outlook: For example, software is expected to grow 4-6 percent, supported by 50 percent+ growth in next-gen and 50 percent+ declines in last-gen. As we noted earlier in the week, that seems reasonable, based on 10 percent growth current-gen hardware units and similar tie ratios to last year. Additionally, hardware is expected to show moderate growth (which is in line with this time last cycle), and digital is expected to grow 10 percent. However, perhaps the most important variable is pre-owned. Pre-owned was weaker in Q4, yet is implied to be up in 2015 and improve vs. Q4. Should pre-owned be flat or down, it may be difficult to achieve the EPS outlook provided. "