GameStop shares were up 6.4% to $14.27 in midday trading on the New York Stock Exchange. The company, which runs retail video game and electronics retail stores such as EB Games and Micromania, has seen it shares fall 20% so far in 2018.
Investors bid up the stock after Bank of America Merrill Lynch analyst Curtis Nagle upgraded the stock based on the recent announced sale of its mobile business, Spring, to Prime Communications L.P. for $700 million.
"The sale of Spring will put an even larger hole in an EBIT base that is rapidly falling but we believe that such a large potential buyback program and the flexibility from having so much cash on the books is likely to be very supportive of shares in the near term," Nagle said in a research note.
"Even with free cash flow dwindling to under $100mn by 2020, for now there is ample cash for capital return and we see less risk to the dividend which yields 11%," he added.
Expectations of strong cyber Monday sales also helped propel GameStop shares higher, with deals including an XBox console bundle for $199 and discounts on popular video game titles such as "Call of Duty: Black Ops 4" drawing consumers, analysts said.