Story updated at 9:50 a.m. to reflect market activity.
Shares of GameStop gained 1.1% to $40.09 in morning trading.
The analyst firm also lowered its EPS estimates for the video game retailer. "We remain largely unimpressed with the Company's emerging terminal value scenario as a mobile distributor," analyst Mike Hickey wrote, "and suspect the rapid acceleration of store deployment is a consideration of the fragility of their core business as digital trends thicken, an acknowledgment that could awaken meaningful valuation compression over the near term."Must read: Warren Buffett's 25 Favorite Stocks EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE. -------------- Separately, TheStreet Ratings team rates GAMESTOP CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation: "We rate GAMESTOP CORP (GME) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GME's revenue growth has slightly outpaced the industry average of 0.3%. Since the same quarter one year prior, revenues slightly increased by 7.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- GAMESTOP CORP has improved earnings per share by 28.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GAMESTOP CORP turned its bottom line around by earning $3.02 versus -$2.23 in the prior year. This year, the market expects an improvement in earnings ($3.68 versus $3.02).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 24.5% when compared to the same quarter one year prior, going from $54.60 million to $68.00 million.
- Net operating cash flow has increased to -$277.20 million or 16.35% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.57%.
- You can view the full analysis from the report here: GME Ratings Report