Market Overview

Game Over For GameStop?

Share:
Game Over For GameStop?

Close on the heels of GameStop Corp. (NYSE: GME) offering a downbeat forecast, Piper Jaffray downgraded the stock from an Overweight rating to a Neutral rating. The firm also slashed its target price by $18 or nearly 44 percent from $41 to $23 on the stock, which was down more than 10 percent.

Analyst Michael Olson cited the following two key factors behind the downgrade:

  • Erosion of game business.
  • New initiatives like collectibles/tech brands failing to compensate the weakness in other segments.

The brokerage termed GameStop’s mix shift as a positive one. However, those positive is not good enough to offset weakness in core game segment. The firm expects the third quarter to be a “microsm of the next several years.”

In a research note, Olson said, “GameStop is swimming upstream in video games due to digital and, while growth of new segments will offer an occasional lifeline, we do not expect Tech Brands & Collectibles will prove large enough to offset. We stayed OW too long due to optimism around the mid-cycle hardware refresh (and VR), but we now believe weakness in the software and pre-owned will overwhelm that potential positive.”

The brokerage thinks GameStop reached a stage where some positives could not be translated into gain citing the hardware refresh, which is good but would not matter much in the changed situation.

At last check, GameStop was down 11.08 percent at $20.95.

Image Credit: By BentleyMall (Own work) [CC BY-SA 3.0], via Wikimedia Commons

Latest Ratings for GME

DateFirmActionFromTo
Sep 2019MaintainsSell
Sep 2019MaintainsOutperform
May 2019MaintainsUnderperform

View More Analyst Ratings for GME
View the Latest Analyst Ratings

Posted-In: Michael OlsonAnalyst Color News Guidance Downgrades Price Target Analyst Ratings Tech Best of Benzinga

 

Related Articles (GME)

View Comments and Join the Discussion!
Need corporate guidance data?
Click here to see licensing options.

Latest Ratings

StockFirmActionPT
XLNXCascendUpgrades115.0
CISNBairdDowngrades10.0
WDAYSociete GeneraleUpgrades
BKUDA DavidsonInitiates Coverage On39.0
JDVertical GroupInitiates Coverage On
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

WisdomTree Provides Little Fruit For Investors; UBS Says Sell

Is The Madden Franchise Impacted By The NFL's Ratings Drop?