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."
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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."