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Credit Suisse: GameStop 'On Pause,' Lowers Price Target


Following GameStop's (NYSE: GME) third-quarter results on Thursday, Seth Sigman of Credit Suisse reiterated a Neutral rating on shares with a price target lowered to $44 from a previous $46.

"GameStop reported weaker Q3 results and lowered its Q4 guidance, which we expect to send the stock down given much higher expectations in the market," Sigman wrote in a note to clients on Friday. The analyst adds that a "lack of visibility and pressure in numerous areas" justifies staying on the sidelines.

GameStop's fourth-quarter guidance includes comps of -5 percent to +2 percent, vs. a prior guidance of +12 percent.

According to Sigman, GameStop needs to show signs of life in software sales given the rise of game manufactures offering digital sales. In addition, GameStop's sales of used games could come under pressure as Wal-Mart Stores, Inc. (NYSE: WMT) continues to push into the space.

The analyst points out that GameStop saw weakness in last-generation software sales and notes that this could "seep" into the used category segment as last-generation likely still accounts for a large portion of used games sales.

Bottom line, GameStop's fourth-quarter guidance could represent a "lower bar" that could create a set up for stock, but it is too early to determine that, according to Sigman.

Latest Ratings for GME

Oct 2020JefferiesDowngradesBuyHold
Sep 2020Telsey Advisory GroupUpgradesMarket PerformOutperform
Sep 2020JefferiesUpgradesHoldBuy

View More Analyst Ratings for GME
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