Sterne Agee CRT Downgrades GameStop (GME) to Neutral

Sterne Agee CRT downgraded GameStop (NYSE: GME) from Buy to Neutral, citing risks to Q4 estimates.

Analyst Arvind Bhatia commented: "We are lowering our investment rating on GameStop (GME) from Buy to Neutral. In the near-term, we see risk to 4Q estimates as holiday sales appeared to fall short of expectations. Also, in the intermediate-term (12 to 18 months), we see digital game downloads taking a more meaningful share and negatively affecting GME. That said, longer-term (3-5 years), we think management of GME will be able to diversify and transform its business such that non-gaming businesses could represent 33% to 50% of earnings. Still, business transformations are never simple or quick and we suspect shares of GME could be range-bound during this transformation process."

The firm is F4Q SSS/EPS estimates to +1.4% / $2.18 from +2.1% / $2.24, respectively. The firm's new estimates are below consensus +2.4% / $2.25. The firm is also lowering FY2016 SSS/EPS estimates to +2.7% / $3.80 from 3.9% / $4.13, respectively. This compares to consensus +2.1% / $4.18, respectively.

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 $28.04 yesterday.

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