Benzinga | Sep 10, 2020 12:06PM EDT

Analysts Aren't Impressed With GameStop's Quarter Or Future

GameStop Corp (NYSE:GME) reported second-quarter earnings after the market close on Wednesday.

GameStop reported revenue down 26.7% year over year to $942 million. Quarterly losses of $1.40 per share missed the analyst consensus estimate by 37 cents.

The GameStop Analysts: Credit Suisse analyst Seth Sigman maintains an Underperform rating with a price target of $3.50.

Benchmark analyst Mike Hickey maintains a Sell rating with a price target of $3.

The GameStop Takeaways: "The bright spot was liquidity," Sigman wrote in a note, pointing to $87 million in proceeds from lease sales and cost cuts.

"While we fully appreciate the effects of the late stage of the cycle," Sigman said, "the implied underperformance remains concerning particularly heading into the launches."

New console releases from Sony Corporation (NYSE:SNE) and Microsoft Corporation (NASDAQ:MSFT) are seen as a catalyst that could surprise on the upside, but also act as a negative given their specs.

"We believe the virus influence on players has accelerated the trend towards digital purchases," Hickey wrote in a note. "Both Sony and Microsoft are offering next gen consoles without disk drives."

The new consoles and market shift present a possible doomsday scenario from Hickey.

"Themes could deconstruct GME's operating model and challenge any long-term value assumptions above $0," he said. "We suspect the market realizes that management's plan are hollow and there is limited evidence from a path toward eventual administration."

GME Price Action: GameStop shares are down 9.5% in Thursday trading to $6.64.