Analyst: Game Theft Auto V Will Drive Strong Quarter for GameStop
The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.
Before market open on Thursday, August 22, GameStop (NYSE:GME) will report its fiscal Q2:13 (ending July) results, and host a conference call at 8:00am PT (webcast: http://investor.gamestop.com).
We expect GameStop to report Q2 EPS at the high end of guidance on mix. Our current estimates are for revenue of $1.30 billion and EPS of $0.08, vs. consensus of $1.35 billion and $0.04. Console/handheld combined HW and SW sales, according to NPD, were down 27.8 percent, well below comps guidance of down 16.0 – 12.5 percent. However, we expect share gains, high-margin digital and mobile growth, and share repurchases to allow the company to deliver Q2 EPS at the high end of guidance of $0.01 – 0.07. We note that at the end of Q1, GameStop reiterated FY:13 growth guidance for digital of 25 – 35% (implying roughly $788 –851 million of revenue for the year) and mobile of 30 – 40 percent (roughly $239 – 258 million). Also, GameStop may have reduced marketing spending in response to worse-than-expected demand as the quarter progressed.