Piper Jaffray Downgrades GameStop (GME) to Neutral; Seeing Permanent Shift To Digital Entertainment
GME Hot Sheet
Rating Summary:4 Buy, 6 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 16 | Down: 7 | New: 23
Piper Jaffray downgrades GameStop Corp. (NYSE: GME) from Overweight to Neutral. Price target cut from $24 to $16
Piper analyst says, "Each month it becomes more evident that interactive game sales are shifting from packaged goods to digital. Packaged goods game sales have declined from ~85% of category sales to ~70% during the past two years. We expect the shift to digital entertainment will continue as the current video game cycle plateaus and declines during the next three years. We expect industry-wide packaged goods game sales will peak during 2010, and GME will experience peak earnings during 2011. Although GME valuation and cash flow characteristics look attractive, we find it difficult to recommend a business with little long-term earnings growth...we expect the stock is range-bound near $16...We project net income near $423M for FY10 and $427M for FY11 (+1% Y/Y). We project EPS at $2.65 for FY10 and $2.80 for FY11 (+6% Y/Y)."
To see all the upgrades/downgrades on shares of GME, visit our Analyst Ratings page.
GameStop Corp. (GameStop) is a retailer of video game products and personal computer (PC) entertainment software.
Piper analyst says, "Each month it becomes more evident that interactive game sales are shifting from packaged goods to digital. Packaged goods game sales have declined from ~85% of category sales to ~70% during the past two years. We expect the shift to digital entertainment will continue as the current video game cycle plateaus and declines during the next three years. We expect industry-wide packaged goods game sales will peak during 2010, and GME will experience peak earnings during 2011. Although GME valuation and cash flow characteristics look attractive, we find it difficult to recommend a business with little long-term earnings growth...we expect the stock is range-bound near $16...We project net income near $423M for FY10 and $427M for FY11 (+1% Y/Y). We project EPS at $2.65 for FY10 and $2.80 for FY11 (+6% Y/Y)."
To see all the upgrades/downgrades on shares of GME, visit our Analyst Ratings page.
GameStop Corp. (GameStop) is a retailer of video game products and personal computer (PC) entertainment software.
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