Market analyst firm Wedbush Morgan Securities announced that it has maintained its stock rating of “buy” for shares of U.S. video game retailer GameStop, with a 12-month price target of $60, in anticipation of a holiday sales update expected on or around January 4. As of this writing, GameStop shares are trading at $55.11.
In a research note issued to investors, Wedbush analyst Michal Pachter noted that the firm expects the retail chain to report strong holiday sales, as well as slightly increase its guidance for the fourth quarter. In addition, the company is also expected to increase is fiscal 2006 guidance as well, which currently calls for revenues between $5.053 – 5.140 billion.
“We believe that GameStop’s same store sales were slightly higher than the guidance range, due to strong industry software and hardware sales notwithstanding a shortage of PS3 and Wii hardware,” wrote Pachter. “We expect the industry to grow by approximately 18 – 22% for the January quarter (software sales growth of approximately 9% and hardware sales growth of 65%).”
He added that “given strong November NPD sales (+14% software, +69% hardware, +33% combined), we believe that GameStop is on track to deliver same store sales above the high end of its guidance, and we expect the company to slightly increase its earnings guidance.”
However, as usual the analyst conceded that its predictions regarding share price for the retailer depend strongly on the timing of upcoming releases, and could be affected by competition, as well as slower than expected consumer demand for video game hardware and software.