A Look At 2 Hot Tech Retailers

As companies continue to report holiday results and analysts weigh in on them, two tech-related retailers, GameStop Corp. GME and Best Buy Co Inc BBY, come into the spotlight.

Related Link: GameStop Up 8% On Holiday Sales Report, Q4 Guidance

GameStop

GameStop was a big gainer on Wednesday after reporting strong demand for video games during the holiday season, which resulted in new software sales growth. CEO Paul Raines said he expects the trend to continue into the first quarter.

These results surprised Pacific Crest’s analyst Evan Wilson, who declared he anticipated a 5 percent decline in new software sales instead of a 5.8 percent rise. Consequently, he upgraded the stock from Underperform to Outperform, setting his price target at $48.

In a recent report, Wilson said he expects “meaningful software growth for GameStop and the industry” this year, as the release slate becomes “much better and consistent.”

Another research firm that might have been surprised by the results is Credit Suisse, which lowered its price target for the stock (maintaining a Hold rating) last week, from $44.00 to $42.00, foreseeing modest holiday sales.

Unlike its peer, Bank of America seems bullish, and last issued (on November 24) a Buy rating, accompanied by a $52 price target.

With the stock trading around $36.50, the worst-case scenario presented by Credit Suisse implies an upside potential of about 15 percent from the current price point.

Related Link: Best Buy Surges Nearly 3% Amid Goldman Sachs Upgrade

Best Buy

Another tech retailer that is also looking good is Best Buy, which was upgraded by Goldman Sachs on Tuesday from a Neutral to a Buy. Analyst Matthew Fassler raised the price target from $38 to $45, highlighting Best Buy’s “positioning as the sole surviving national specialty retailer in a category with increased product excitement.”

Jefferies reiterated its Buy rating and $46 price target for Best Buy last week. Citigroup did the same, fixing the price target at $45.

The stock traded below $40 at the time of this writing.