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GameStop Coverage Pulled at Telsey; Wedbush Says Retailer Overvalued

Telsey dropped coverage of GameStop. And Wedbush called the videogame retailer overvalued. The company reports on Wednesday.

GameStop  (GME) - Get Report hit some analyst headwinds two days before it reports fiscal-first-quarter earnings.

Telsey Advisory Group halted coverage of the Grapevine, Texas, videogame retailer, as it reconsiders which companies it will follow, Bloomberg reported. 

And Wedbush analyst Michael Pachter reiterated his underperform rating and $39 price target on the stock.

GameStop shares recently traded at $277.73, up 12%. They have skyrocketed (up 1,501%) over the past six months, as the Reddit crowd of retail investors has gone gaga for the meme stock.

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Telsey warned investors not to rely on what had been its underperform rating and price target of $30 on GameStop.

Pachter views the stock's surge as way overdone. "The short squeeze and retail investor enthusiasm seen in recent months have spiked the share price to levels that are disconnected from the fundamentals of the business," he said. 

To be sure, "GameStop is well-positioned to be a primary beneficiary of the new console launches, and we remain quite optimistic of its return to profitability by fiscal year 2021," Pachter said.

On May 26, Brent Kenwell of discussed whether GameStop can revisit $300. “It’s actually quite impressive how high the stock price remains given that it’s been months since the short-squeeze hoopla created a stir in January,” he said.

“Impressively, the stock remains elevated despite multiple earnings reports and the company’s announcement to raise $551 million via a secondary offering. While this action will result in more shares coming to market … bulls have remained undeterred.”

On May 27, Founder Jim Cramer recommended against selling GameStop yet.