Wedbush: Here's What To Watch At GameStop Before Earnings

GameStop Corp. GME is scheduled to report its fourth-quarter 2014 earnings on Thursday, March 26, after market close.

In a report issued Monday, Wedbush analysts Michael Pachter, Nick McKay and Alicia Reese provide a preview of the results, which they expect "towards the high end of the guidance ranges provided in mid-January."
The analysts have adjusted their estimates for revenue to $3.74 billion from $3.85 billion, and comp figures to -1.0 percent from +2.0 percent. They also project EPS of $2.25, and see F/X translation slightly impacting sales. However, they expect "GameStop's international expenses to act as a natural hedge for EPS."

Related Link: Everything Is Awesome At Gamestop

On January 13, GameStop had guided EPS of $2.08 to $2.24, and comps of -2.5 percent to -1.0 percent (versus -5.0 percent to +2.0 percent previously). Consensus is for revenue of $3.63 billion (implying estimated comps of roughly -4 percent) and EPS of $2.16.
For fiscal 2015, Wedbush expects guidance to include revenue growth of at least 5 percent (to at least $10 billion) and EPS growth of at least 10 percent (to $3.90).

However, the firm expects actual EPS "to exceed the current consensus estimate and initial guidance, as company guidance is unlikely to factor in future share repurchases."
Finally, Wedbush expects shares of the company to benefit from a favorable release slate in the first half of 2015.

Thus, they maintain an Outperform rating and a $50 price target on the stock.