Needham & Company analyst Sean McGowan reiterated a Buy rating and $55 price target on GameStop (NYSE: GME) following solid Q1 results as share repurchases are likely to provide upside.

McGowan comments, "1Q Results were in line with guidance and Street consensus. GME reiterated FY expectations. SSS increased 5.8% YoY due to continued demand for next-gen consoles from Sony and Microsoft as sell-through has more than doubled the prior generation through the first six months of the launch. The mobile and consumer electronics category, which was a major topic of discussion at the company's investor day, increased over 100% YoY. In short, next-gen consoles drove a solid quarter and with future share repurchases likely we believe there is upside to management's current guidance."

The firm maintain their 2014 EPS estimate of $3.85, but have raised EPS estimates for 2015 and 2016 on higher sales estimates.

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Shares of GameStop closed at $36.88 yesterday.