Wedbush maintained an Outperform rating on GameStop (NYSE: GME) with a price target of $60. Comments follow Q1 results.

"GameStop has been a large beneficiary of the success of the new consoles. Through the first six months of launch, industry PS4 and Xbox One hardware unit sales are 107% higher than for the previous generation, new console software unit sales are up 45%, and sales of accessories are flat. GameStop has outperformed the industry, with next-gen console new hardware unit sales up 182%, new software up 113%, and accessories up 48%. For hardware, GameStop is driving nearly 40% of the industry’s total dollar growth this cycle. For software and accessories, it is driving 83% and 87% of the growth, meaning that it is capturing a larger percentage of the growth for two categories that are more profitable," said analyst Michael Pachter.

"Strong mobile growth driven by Technology Brands. Mobile sales were $102.2 million (vs. last year’s $51 million), with Technology Brands accounting for $60.2 million of sales and contributing $6 million of operating profit at a 10% margin. Gross margins exceeded our expectations, driven by the pre-owned and used category and Technology Brands. Q1’s 31.4% gross margin was a record high for any first quarter in the company’s history. Q2 guidance bracketed consensus. Initial Q2:14 guidance is for comps of up 12.0 – 19.0% and EPS of $0.12 – 0.20, compared with our prior estimates of up
21.0% and $0.29, and the prior consensus estimates of up 14.0% and $0.17," he added, concluding, "We expect GameStop to gain a disproportionate share of new game sales or a slew of compelling core releases in FY:14."

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Shares of GameStop closed at $36.88 yesterday.