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01/17/17 11:00:10 AM
WORD ON THE STREET

GameStop Corp., Netflix, Inc., GameStop Corp.

GameStop Corp.(GME) : Wedbush's Michael Pachter expects GameStop Corp. (NYSE: GME) shares to continue to trade at a compressed multiple until the company is able to successfully reverse the decline in its core video game business. Pachter maintains an Outperform rating on the company, with a price target of $28. GameStop'sholiday same-store sales declined 18.7 percent, significantly missing the Q4 guidance, driven by weaker than anticipated industry sales, promotional pricing pressure and a drop in in-store traffic due to a digital mix shift. "GameStop was unwilling to sacrifice margin dollars by matching some of the deep discounting at other retailers," the analyst stated. Data from NPD revealed that industry sales declined about 29 percent in November and 18 percent in December, well below the levels expected by management, with the company acknowledging that it had lost market share during both months. In addition, GameStop saw a 30.3 percent decline in new hardware sales, while new software sales declined 22.8 percent, again below the Q4 guidance. The company has lowered its comps guidance for Q4 and FY 2016, while "new businesses fared better, helping GameStop to maintain its Q4 and FY:16 EPS guidance ranges of $2.23 - 2.38 and $3.65 - 3.80," the analyst noted. The company was able to achieve its Collectibles revenue guidance, while the Tech Brands revenue grew 44 percent, beating the estimate. GameStop intends to lower SG&A spend by $100 million by 2019 by closing its unproductive stores. However, Pachter expect modest net income declines to continue in 2017, with flat EPS due to a lower share count. During Q1:17, the company is expected to benefit from the launch of Nintendo Switch, while the Collectibles and Tech Brands segments are likely to continue to grow. At last check, shares of GameStop were up 3.41 percent at $23.50. Image Credit: By Oxiq (Own work) [CC0], via Wikimedia Commons View More Analyst Ratings for GMEView the Latest Analyst Ratings Write to editorial@benzinga.com with any questions about this content. Subscribe to Benzinga Pro: http://pro.benzinga.com 2015 Benzinga Newswires. Benzinga does not provide investment advice. All rights reserved.



Netflix, Inc.(NFLX) : Netflix, Inc.(NASDAQ: NFLX) shares are trading lower by $0.50 at $133.20 in Tuesday's session. Off the open, the issue sprinted to a new all-time high ($135.40), eclipsing the former high ($133.93) by over $1.00. The rally off the open may be attributed to an upgrade from Mizuho, which raised its rating from Neutral to Buy and and raised its price target from $112.00 to $152.00. The rating change comes only one day before the company announces its Q4 results after the close on Wednesday. Since making that high, there has been some profit-taking in the issue. The ensuing decline exceeded Friday's close ($133.70), but hasn't reached Friday's low ($130.58) as the current low stands at $132.31. In order to post a new all-time closing high, Netflix needs to close above $133.70. Write to editorial@benzinga.com with any questions about this content. Subscribe to Benzinga Pro: http://pro.benzinga.com 2015 Benzinga Newswires. Benzinga does not provide investment advice. All rights reserved.



GameStop Corp.(GME) : Wedbush's Michael Pachter expects GameStop Corp. (NYSE: GME) shares to continue to trade at a compressed multiple until the company is able to successfully reverse the decline in its core video game business. Pachter maintains an Outperform rating on the company, with a price target of $28. Same-Store Sales Decline GameStop's holiday same-store sales declined 18.7 percent, significantly missing the Q4 guidance, driven by weaker than anticipated industry sales, promotional pricing pressure and a drop in in-store traffic due to a digital mix shift. "GameStop was unwilling to sacrifice margin dollars by matching some of the deep discounting at other retailers," the analyst stated. Data from NPD revealed that industry sales declined about 29 percent in November and 18 percent in December, well below the levels expected by management, with the company acknowledging that it had lost market share during both months. Q4 Guidance Missed In addition, GameStop saw a 30.3 percent decline in new hardware sales, while new software sales declined 22.8 percent, again below the Q4 guidance. The company has lowered its comps guidance for Q4 and FY 2016, while "new businesses fared better, helping GameStop to maintain its Q4 and FY:16 EPS guidance ranges of $2.23 - 2.38 and $3.65 - 3.80," the analyst noted. The company was able to achieve its Collectibles revenue guidance, while the Tech Brands revenue grew 44 percent, beating the estimate. 2017 Expectations GameStop intends to lower SG&A spend by $100 million by 2019 by closing its unproductive stores. However, Pachter expect modest net income declines to continue in 2017, with flat EPS due to a lower share count. During Q1:17, the company is expected to benefit from the launch of Nintendo Switch, while the Collectibles and Tech Brands segments are likely to continue to grow. At last check, shares of GameStop were up 3.41 percent at $23.50.



 

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