GameStop Corp. (GME) sells software, hardware, and game accessories for video game systems and personal computers. While we remain long-term bulls on video game sales and GameStop, we believe that macro headwinds are beginning to take a bite out of the company's near-term results.
The worsening economic conditions appear to be picking up steam as we approach the important holiday shopping season. As a result, we are lowering our estimates for GameStop ahead of its third-quarter results.
We are essentially taking back our upside revisions after the company reported second-quarter results. Our 2008 EPS estimate goes from $2.52 to $2.39 and our 2009 EPS estimate goes from $3.10 to $2.89. Management expects to earn $2.45-$2.50 in 2008 and $3.06-$3.13 in 2009. However, that guidance was issued before the economy hit a wall in September. We maintain our Buy rating but reduce our six-month target price to $35.
Read the full analyst report on GME
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