GameStop Stock Reaction Muted After Mixed Results, Analyst ‘Encouraged’ and Raises Price Target
2022.06.02 15:52
GameStop (GME) Stock Reaction Muted After Mixed Results, Analyst ‘Encouraged’ and Raises Price Target
By Senad Karaahmetovic
GameStop (NYSE:GME) reported a Q1 adjusted loss per share of $2.08, compared to a loss per share of 45c in the year-ago period and the expected loss per share of $1.16.
Net sales stood at $1.38 billion in the quarter, up 8% YoY and above the consensus projection of $1.33 billion. The company generated $673.8 million in Hardware and Accessories net sales, down 4.2% YoY. Software net sales totaled $483.7 million, up 22% YoY. GameStop ended the quarter with $1.035 billion in cash and cash equivalents.
The retailer said its wallet extension feature will also allow users to make transactions on GameStop’s NFT marketplace upon its rollout in the second quarter.
Jefferies analyst Stephanie Wissink raised the price target on GME shares to $110.00 per share from $90.00 after being “encouraged” by the progress made in the last year.
“We remain without guidance or a full blueprint, and fundamental investors we speak with remain skeptical of the poor economics of the legacy business + growth focused cash-burn. Still, cash position remains healthy enough to disregard near-term margin degradation, and GME emphasizes that success hinges on the rebuilding of customer trust, expanding the loyalty program, & e-com transition while stabilizing retail and re-imagining the future of physical + digital gaming and play experiences,” Wissink told clients in a note.
Baird analyst Colin Sebastian saw “mixed” results.
“GameStop reported mixed Q1 results with revenues exceeding consensus expectations, but at a cost, with higher inventory levels and ongoing mix shift in sales leading to lower gross margins, compounded by higher operating expenses, leading to a widening operating loss,” Sebastian said.
