This Quarter May Just Be 'OK' For Gamestop, Oppenheimer Says

• GameStop Corp. GME shares have appreciated 13.79 percent year-to-date, from a low of $32.27 on January 9.
• Oppenheimer’s Brian Nagel has maintained an Outperform rating on the company, with a price target of $51.
• Nagel believes that even with the ongoing improvements, the Q3 results might not be enough to turn the negative sentiment against the stock, with Q4 proving to be a “break out period” for GameStop.

Analyst Brian Nagel also mentioned that “even against a backdrop of climbing sales of downloaded games, we believe that stronger demand for new titles and market share gains will lead to better results at GME and chase some shorts from shares, if even only temporarily.”

NPD had reported on November 12 that sales of physical software had declined 3 percent in the US in October, as compared to declines of 10 percent and 3 percent in August and September, respectively.

“We interpret this data to imply that launches later in the period were not enough to offset solid sales of Destiny and Super Smash Bros in the prior year,” Nagel said.

On the other hand, Nagel expects the sales of the new AAA software titles to add over $1 billion in sales for the company in 4Q15, as compared to the total new software sales of about $1.3 billion in 4Q14.

According to the Oppenheimer report, “Going forward, falling sales of prior-gen software should become less of a drag for GME.”

The EPS estimate for Q3 has been reduced from $0.60 to $0.53, with sales of new software expected to decline 5 percent in constant currency.