GameStop Hit With Numerous Upgrades, But Still Can't Bounce (GME)
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Price: $10.42 +1.07%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 13.9%
Revenue Growth %: -12.1%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 13.9%
Revenue Growth %: -12.1%
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Shares of GameStop (NYSE: GME) have had a rough 2008 so far, falling about 27% from $62 to $45 today. If this decline continues it would be a reversal from its solid uptrend last year: GameStop stock rose more than 100% in 2007, from about $28 to around $60 by year-end.
With GameStop's stock price falling so much this year, valuations have become more attractive and, consequently, the stock has been the target of several analyst upgrades. So far in February, three large analyst firm's have raised their investment ratings on GameStop to Buy.
Citigroup boosted the stock from Hold on Feb. 4, also raising its price target from $57 to $65. Yesterday, UBS moved GameStop to Buy and today S&P Equity upgraded the Company's stock, but maintained its $58 price target.
Soleil Securities also commented on GameStop today, calling management's same store sales guidance of mid-single digit growth for January "conservative". The Soleil report also noted that domestic video game industry sales (as reported by the NPD) for the month of January were higher than the Street was expecting: sales rose about 18%, versus the Street estimate of mid-teens growth. The firm currently has a Buy rating and $73 price target on GameStop.
Despite these encouraging reports, several factors paint a concerning picture for GameStop shareholders. From a technical standpoint, shares of GameStop appear to have broken through a support level around $47. After breaking-out from this level at the end of August '07, the Company's stock tested this price level twice, bouncing both times. This time, however, the stock price seems to be moving through this level, as it is now trading just over $45, and continues to decline.
Furthermore, CNBC's Jim Cramer, who was a consistent proponent of the stock throughout much of '07, appears to have taken a much more sobering take on the stock: taking a call on Monday's episode of Mad Money, Cramer told viewers that "GameStop is good, but not great here" and recommended waiting another eight months before deciding to invest.
With GameStop's stock price falling so much this year, valuations have become more attractive and, consequently, the stock has been the target of several analyst upgrades. So far in February, three large analyst firm's have raised their investment ratings on GameStop to Buy.
Citigroup boosted the stock from Hold on Feb. 4, also raising its price target from $57 to $65. Yesterday, UBS moved GameStop to Buy and today S&P Equity upgraded the Company's stock, but maintained its $58 price target.
Soleil Securities also commented on GameStop today, calling management's same store sales guidance of mid-single digit growth for January "conservative". The Soleil report also noted that domestic video game industry sales (as reported by the NPD) for the month of January were higher than the Street was expecting: sales rose about 18%, versus the Street estimate of mid-teens growth. The firm currently has a Buy rating and $73 price target on GameStop.
Despite these encouraging reports, several factors paint a concerning picture for GameStop shareholders. From a technical standpoint, shares of GameStop appear to have broken through a support level around $47. After breaking-out from this level at the end of August '07, the Company's stock tested this price level twice, bouncing both times. This time, however, the stock price seems to be moving through this level, as it is now trading just over $45, and continues to decline.
Furthermore, CNBC's Jim Cramer, who was a consistent proponent of the stock throughout much of '07, appears to have taken a much more sobering take on the stock: taking a call on Monday's episode of Mad Money, Cramer told viewers that "GameStop is good, but not great here" and recommended waiting another eight months before deciding to invest.
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