GameStop (GME): Maintaining Outperform Ahead Of Hardware Refresh - Piper Jaffray
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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.
Shares of GameStop closed at $32.16 yesterday.
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Related EntitiesPiper Jaffray, Michael Olson
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