GameStop stock price target cut to $10 from $12 at Benchmark

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GameStop’s stock plunges toward 13-year low; analyst says growth strategy is ‘non-tangible’

GameStop Corp.’s stock plunged 12% in morning trade toward a 13-year low, after the video game retailer reported profit and sales that beat expectations but provided a downbeat outlook. The company reported late Wednesday fiscal fourth-quarter adjusted earnings per share of $2.02, revenue growth of 15% to $3.50 billion and same-store sales growth of 12.2%, compared with the FactSet consensus for EPS of $1.99, revenue of $3.27 billion and a same-store increase of 9.3%. For fiscal 2018, the company said it expected adjusted EPS of $3.00 to $3.35, compared with the FactSet consensus as of Feb. 28 of $3.32. Analyst Mike Hickey at Benchmark said the EPS outlook “disappointed” because a new favorable tax rate would have added about 35 cents a share to his estimate. He reiterated his sell rating while cutting his stock price target to $12. “The company’s executive team is in disarray, after their CEO has sadly departed, and their articulated growth strategy on the call was non-tangible, in our view,” Hickey wrote in a note to clients. The stock, which is trading at the lowest level since May 2005, has shed 30% over the past three months, while the S&P 500 has gained 2.2%.

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