At The Motley Fool, we poke plenty of fun at Wall Street
analysts and their endless cycle of upgrades, downgrades, and
"initiating coverage at neutral." So you might think we'd be
the last people to give virtual ink to such "news." And we
would be -- if that were all we were doing.
But in "This Just In," we don't simply tell you what the
analysts said. We'll also show you whether they know what
they're talking about. To help, we've enlisted
Motley Fool CAPS, our tool for rating stocks and analysts
alike. With CAPS, we track the long-term performance of Wall
Street's best and brightest -- and its worst and sorriest,
too.
And speaking of the best ...
It's hard out there for a gamer. On Monday, market
researcher NPD Group reported that September sales of video
game hardware, software, and accessories eked out a bare 1%
increase over last year's levels. This fell far short of the
10% and 20% numbers that Wall Street had projected, and a
disappointed Street took out its frustration on shares of
gaming specialist
GameStop (NYSE: GME).
Citing weak sales and diminished "new product foot
traffic," Janney Montgomery Scott pulled its buy rating on
the stock yesterday. According to Janney, the fact that
console cost-cuts by
Microsoft (Nasdaq: MSFT),
Nintendo , and
Sony have failed to spark sales growth raises
concerns "about the health of the gaming cycle and
[GameStop's] need to discount used product to compensate for
the lack of new product."
Janney thinks we'll see firmwide sales decline 4% in the
fiscal third-quarter, and so is going "neutral" on the
shares. (Meanwhile, taking a page from the contrarian
playbook, rival analyst RBC Capital Markets just initiated
coverage of shares of key GameStop suppliers
Activision Blizzard (Nasdaq: ATVI) and
Electronic Arts (Nasdaq: ERTS) at
"outperform" -- so go figure.)
Let's go to the tape
Is Janney's move a disappointment for GameStop
investors? No doubt. But here's the good news: When it comes
to retail, Janney's a perfectly awful analyst:
Stock
JMS Says:
CAPS says:
JMS's Picks Beating (Lagging) S&P
By:
American Eagle (NYSE: AEO)
Outperform
****
(36) points
GameStop
Outperform
***
(29 points)
Blockbuster (NYSE: BBI) Continued... |