SunTrust Answers What's Coming For GameStop In Its Q4 Report

In a report published Tuesday, SunTrust Robinson Humphrey analyst David Magee previewed GameStop Corp.'s (NYSE: GME) fourth quarter results, which are scheduled to be released Thursday after market close.

Magee estimated GameStop will earn $2.16 per share in the quarter, representing a 13 percent increase from the same quarter a year ago. Revenue is estimated to be $3.6945 billion while same-store sales are expected to decline 1.8 percent, slightly better than the Street's 1.9 percent forecast.

"GameStop gave an encouraging update on holiday sales on Jan. 13, as total sales were in line with expectations (-3 percent against last year's tough comparison of 10 percent), and software (39 percent of the mix) came in above expectations at +6 percent year over year," Magee wrote. "So, it appears that the fourth quarter will be ok (not insignificant as the holiday has traditionally posed a challenge for GameStop)."

Magee also stated that he expects initial 2015 guidance will bracket the Street mean of $4.08 per share with the range midpoint implying low double digits to mid-teens earnings per share growth. In addition, the analyst is expecting a same-store sales forecast of mid-to-high single digits.

Bottom line, with most of the top-line future growth coming from new software sales (primarily for current-generation devices at 31 percent) as well as mobile and digital, the company is "well positioned."

Shares remain Buy rated with an unchanged $55 price target.