GameStop a Choice Play on Holiday Spending - Barron's

Includes: GME, NTDOY
by: SA Eli Hoffmann

Computer game retailer GameStop (NYSE:GME) may pull off an estimate-beating holiday sales season even as spending on corporate IT and other areas of retail falters, Barron's Mark Veverka says. GameStop has about 5,000 stores in 17 countries from which it sells a kid's dream-chest of high-ticket items like game consoles and software. Bears, including a sizable short position, note that the company's Q4 EPS guidance last week of $0.95 to $0.97, while higher than previous outlooks, fell short of the Street's $1.01/share consensus estimate. Shares fell 10.3% to $50.15 over the week. But Janco Partners videogame analyst Mike Hickey thinks traders betting parents will skimp on video games and consoles are wrong: "Kids aren't getting clothes this Christmas. They're going to get a Wii," he says, referring to Nintendo's (OTCPK:NTDOY) console that gets users off the couch, and appeals even to non-geeks and families. "The iPod is sort of a solo experience, but the Wii brings families together while the Monopoly board is collecting dust in the basement," he says. Hickey's has a $68 target on GameStop shares: "They are just going to crush it."

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