GameStop shares up after analyst upgrade
NEW YORK (AP) — Shares of GameStop Corp. jumped Friday after an analyst upgraded the videogame store chain based on encouraging signs from the just-ended E3 videogame trade show in Los Angeles.
THE SPARK: Oppenheimer & Co. analyst Brian Nagel upgraded GameStop to "Outperform" from "Perform" in a morning research note.
"We came away from the event very encouraged," Nagel wrote. Later this year, Microsoft Corp. is launching a new Xbox, and Sony is launching a new PlayStation. Nagel believes this will drive a resurgence in sales and profits at GameStop. He raised his price target on the shares to $50 from $27.
At the show, both Microsoft and Sony showed off footage from new games. The Xbox One will cost $499, and the PlayStation 4 will cost $399. They're the first new consoles from the companies since 2006. Nintendo launched a fresh console late last year.
ANALYSIS: Nagel says GameStop still faces the long-term threat of being replaced by online game downloads, but investors are underestimating its profit potential. The company is well prepared to capitalize on gamer interest in the new consoles, he believes.
SHARES: GameStop's stock rose $1.66, or 4.4 percent, to $39.19 in afternoon trading. The high for the day was $39.77, just 10 cents below the five-year high of $39.87 hit a month ago.