Wedbush ups GameStop target to $7, sees sales declines continuing

Wedbush raised the firm’s price target on GameStop to $7 from $5.60 and keeps an Underperform rating on the shares following the preliminary Q1 report. GameStop expects Q1 sales to be in the range of $872M – $892M, compared with Wedbush’s estimate of $1.0B and the consensus of $1.045B, the analyst tells investors in a research note. The firm thinks GameStop’s hardware sales will decline further this year as Sony issued PS5 unit guidance at 18M for fiscal 2204 after having reported unit sell-in of 20.8M in 2023, below its initial estimate of 25M. With recent reports of the next Call of Duty installment coming straight to Game Pass, physical sales will decline, contends Wedbush. The firm says GameStop is capitalizing on a recent spike in share price by “prudently” issuing shares at a premium, providing itself a greater level of reserves while it struggles to re-focus its business and reverse continuing operating losses. The new price target reflects roughly $5.50 per share of net cash, plus a going concern value of roughly $1.50 per share.