GameStop Corp. (NYSE:GME) released its latest earnings report last night, beating consensus estimates even though the retail chain had some tough comparisons. As a result of last night’s strong results, analysts at Ascendiant Capital Markets bumped their price target for the company up from $54 to $55 per share and maintained their Buy rating on the stock.

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GameStop beats estimates

The retail chain reported $1.73 billion in revenue, which beat Ascendiant’s estimate of $1.67 billion and the consensus estimate of $1.65 billion. Comparable store sales rose 21.9%, compared to Ascendiant’s estimate of a 17.5% improvement. Earnings per share were 22 cents, compared to their estimate of 19 cents and the consensus estimate of 18 cents per share. GameStop had guided for second quarter revenue of between $1.58 billion and $1.69 billion, a 12% to 19% improvement in comparable store sales and earnings of between 12 cents and 22 cents per share.

GameStop reported strong consoles, which rose 125% year over year because of the new console launches. In a report dated Aug. 22, 2014, Ascendiant analyst Edward Woo noted that the new consoles sold twice as fast as the previous generations of consoles in the first nine months after their release. The retail chain reported solid software sales as well.

GameStop’s guidance is positive

The retail chain maintained its full year guidance for a 6% to 12% increase in comparable store sales and earnings of between $3.40 and $3.70 per share. The company offered third quarter guidance for between a 1% and 5% increase in comparable sales and earnings of between 58 cents and 64 cents. That was better than consensus estimates even though the third quarter brings a difficult comparison. In last year’s third quarter, GameStop sold off 6 million units of Grand Theft Auto V.

Nonetheless, Woo think’s the retail chain’s full year guidance is conservative and that it will beat it.

GameStop estimates increased

As a result, he increased his estimates for GameStop. He now expects $10.26 billion in full year revenue, compared to his previous estimate of $10.21 billion. He’s looking for a 12% improvement in comparable sales, compare to his previous estimate of 11.1% improvement. He also bumped up his earnings per share estimate from $3.72 to $3.73 per share.

The analyst notes that some investors have been concerned about the switch from physical games to digital downloads, as this will likely affect GameStop going forward. However, he thinks the transition will be slow, as the retail chain estimated that about 40% of all downloadable content is sold at actual retail soles and up to 70% on some titles.

Woo remains positive on GameStop, citing an “attractive” valuation and strong cash flow generation, which he thinks will offset concerns. He also notes that the retail chain has a big buyback program and an “attractive” dividend. The analyst also thinks that the high short interest, which is at around 30% of the float, could offer additional support if the company meets or exceeds expectations.