GameStop's Outlook May Be 'Conservative'

GameStop Corp. (NYSE: GME) extended its losses Friday on a weak third-quarter earnings report and outlook, while an analyst pointed to online computer game sales as a long-term threat.

GameStop closed Friday at $37.86, down 13 percent.

The company "is at the center of the gaming ecosystem" at present, Credit Suisse's Seth Sigman said in a note Friday.

"But customers seem to be getting accustomed to transacting digitally," Sigman said, "which could start a move away from GameStop."

Sigman maintained a Neutral rating on GameStop and trimmed his target to $44, from $46.

GameStop on Thursday forecast fourth-quarter earnings of $2.08 to $2.24, vs. Wall Street's expectation of $2.28.

Sigman said the latest forecast "seems more achievable" that what analysts had expected, and "may even be building in some conservatism"

Sterne Agee's Arvind Bhatia was more constructive in a "flash note" late Thursday, maintaining a Buy rating and $52 target.

Bhatia noted that the company's digital business grew 53 percent in the recent period -- the strongest rate in the last seven quarters.

Adjusted earnings of $0.57 a share were $0.04 below Wall Street's expectation, which Bhatia attributed to the timing of title launches, including a shift of "Assassin's Creed Unity" to the fourth quarter, from the third quarter.