GameStop (GME): Maintaining Outperform Ahead Of Hardware Refresh - Piper Jaffray

August 26, 2016 8:49 AM EDT
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Price: $24.77 +0.08%

Rating Summary:
    12 Buy, 8 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 17 | Down: 27 | New: 7
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Piper Jaffray analyst, Michael Olson, reiterated his Overweight rating on shares of GameStop (NYSE: GME) after the company reported Q2 EPS slightly ahead of consensus with revenue below. Guidance for Q3 is in-line with the Street and the FY EPS outlook of $3.90-4.05 was maintained (Street $3.98). The guidance does not include share repurchases, while Street ests do.

The top-line miss was due to an 18% decline in New Software from a tough comparison with the launch of Batman the prior year as well as fewer launches of top tier titles overall. Management attributed a 33% decline in New HW sales to news of an imminent console refresh. However, higher margin Tech Brands revenue was up 55%, and total gross margin was up 500bps (highest in company history), which drove EPS to $0.27 vs Street at $0.26. GameStop did not repurchase shares in Q2, but expects to repurchase a significant amount ($75-$100M) through the remainder of '16.

No change to the price target of $41.

For an analyst ratings summary and ratings history on GameStop click here. For more ratings news on GameStop click here.

Shares of GameStop closed at $32.16 yesterday.

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Piper Jaffray, Michael Olson

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