Video game retailer GameStop Corp. (NYSE: GME) hosted
a series of meetings with institutional investors on Wednesday. Loop Capital Markets' Anthony Chukumba tagged along and offered his observations in a research
report.
Chukumba maintains a Buy rating and $28 price target on GameStop's stock after
leaving the meetings "incrementally more positive" on the retailer's outlook, especially in the core video game and video game
collectibles.
GameStop Maintains 2017 Guidance
During the presentations, GameStop's management explained why it maintained its fiscal 2017 earnings per share guidance despite
a better-than-expected first-quarter
earnings report. First, management cited a lack of visibility on future Nintendo Co., Ltd (ADR) (OTC:
NTDOY) Switch allocations, and the delay of the “Red Dead Redemption 2”
video game by Take Two Interactive Software Inc (NASDAQ: TTWO) publishing house Rockstar Games.
In terms of the Nintendo Switch, GameStop is happy with the product's performance so far and expects demand for the console to
exceed supply for at least the foreseeable future. Moreover, the company continues to sell five software titles and accessories for
each Switch device sold.
Growth Of Collectibles
GameStop expects sales of collectibles to total $650 million to $700 million in fiscal 2017. In fact, these sales are becoming
more predictable than the core video game business, and management will take advantage of this trend by increasing collectible
shelf space in retail locations.
Technology Brands
GameStop's Technology Brands segment (including Simply Mac, Spring Mobile and Cricket Wireless stores) did see a decrease in
profitability in the first quarter, which the company attributed to a slowdown in wireless upgrades.
However, the company does expect the segment to improve in the bottom half of 2017 and management continues to expect the unit
to contribute $120 million in operating income in fiscal 2017, up from $90 million a year ago.
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Concerns With GameStop's Q1 Report: Software, Mobile
Nintendo
Switch Gives GameStop An Extra Life In Q1
Latest Ratings for GME
Date |
Firm |
Action |
From |
To |
Mar 2017 |
Wedbush |
Maintains |
|
Outperform |
Mar 2017 |
Telsey Advisory Group |
Downgrades |
Outperform |
Market Perform |
Jan 2017 |
Macquarie |
Downgrades |
Outperform |
Neutral |
View More Analyst Ratings for
GME
View the Latest Analyst Ratings
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