GameStop (GME) Stock Climbs on Ratings Upgrade

GameStop (GME) stock is trading higher on a ratings upgrade to 'buy' at BofA/Merrill Lynch.
By Rachel Graf ,

NEW YORK (TheStreet) -- Shares of GameStop (GME) - Get Report are rising 4.24% to $28.53 in mid-afternoon trading on Monday after Bank of America/Merrill Lynch upped its rating on the stock to "buy" from "neutral."

The firm hiked its price target to $35 from $32 on shares of the video game retailer.

The upgrade reflects "a number of underappreciated factors that we believe could meaningfully improve traffic and earnings trends for GameStop over the next few years," BofA/Merrill Lynch said in a note cited by CNBC.com.

These factors include expectations of a mid-cycle console upgrade at Sony (SNE) and Microsoft (MSFT), and the release of a new console platform at Nintendo (NTDOY).

Additionally, "the launch of virtual reality this fall ... could be particularly impactful for GME," the firm wrote. 

Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C+.

GameStop's strengths such as its attractive valuation levels and largely solid financial position with reasonable debt levels by most measures are countered by weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and deteriorating net income.

You can view the full analysis from the report here: GME

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author. 

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