GameStop (GME) PT, Estimates Cut at Piper Jaffray Following Mixed Q4

Piper Jaffray analyst Michael Olson lowered estimates and his price target on GameStop (NYSE: GME) to $47.00 (from $51.00) but maintained an Overweight rating following Q4 results.

Olson commented, "GameStop reported mixed Q4 results, with EPS of $2.15 ($0.02 below the Street). Comp guidance for Q1 was also below consensus and 2015 EPS outlook is $0.35 under the Street. Guidance is below consensus based on legacy gen sw weakness and FX; also EPS guidance does not include share repurchases, while Street estimates do. Several key metrics continue to be strong, including gross margin (record levels in '14 and expected to rise in '15) and next gen sw market share (46% in '14). GameStop also indicated that it repurchased 1.6M shares in Q4 for $62M and will repurchase a minimum of $200M in '15. The video game industry has now largely worked through the console transition "air pocket" and, despite legacy gen software weakness, we expect the optics of the sector to improve in '15. Maintain OW, lowering PT to $47 from $51 based on 11x (unchanged) CY16E EPS."

The firm lowers FY 2015 EPS from $4.10 to $3.80 and FY 2016 EPS from $4.59 to $4.30.

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 $38.79 yesterday.

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