Wedbush Maintains Outperform, $50 PT At GameStop

In a report published Friday, Wedbush analysts maintained their Outperform rating and price target of $50 on

. The analysts expect the company to announce its 1Q16 results in-line with or ahead of the guidance, driven by next-generation software strength. Although combines sales of hardware and software declined 1 percent during the quarter, next-generation software sales rose 81 percent, driving next-generation sales growth of 22 percent. "GameStop's leading market share on next-gen HW and SW should allow a sales growth figure at the high-end of the range, assuming Technology Brands performed roughly in-line with our expectations," the analysts stated. Even if the revenue comes in below the estimates, the analysts believe that the company would be able to meet the high end of its EPS guidance via share buybacks. As of late March, GameStop still had $428.4 million left of its authorized share repurchase plan. According to the Wedbush report, the company is likely to leave its full year guidance unchanged, given the continuing challenges to the expansion of the Technology Brands expansion, FX headwinds and console refresh. "We expect New Video Game SW, Digital, and Mobile and Consumer Electronics (due in large part to Technology Brands) to drive top-line growth in FY:15, with EPS benefitting from mix shift (lower hardware sales) and repurchases," the analysts added. However, the analysts expect the Q2 guidance to be below the consensus expectations due to tough software comps. The stock's performance could be adversely impacted in the event that the guidance is issued below consensus, the Wedbush report says.