Happier holidays for game stocks

The holidays got significantly happier for game publishers today, with shares of game publishers and retailers gaining on Wall Street. Electronic Arts led the charge, shooting up $2.28 (5.51%) to $43.63, followed closely by Take Two Interactive's $1.97 (6.98%) and THQ's $0.92 (6.21%) jumps to $30.18 and $15.74, respectively. Konami Corp. rose $1.15 (4.33%), hitting $27.70 at day's end.

Upbeat holiday market assessments sparked the rally, which came just days after several analysts downgraded some of the same companies. Following a Wednesday conference attended by many publishers, investment bank UBS contradicted SoundView's gloomy predictions of holiday game sales. "The overall market seems to be close to the range of expectations so far, though we do think there are still some issues," said UBS games analyst Mike Wallace. "[The market is] clearly not spectacular, but by no means a disaster either."

In the wake of the meeting, J.P. Morgan raised the EA's stock rating "overweight" from "neutral." Morgan felt EA's recently lowered share price, which has dropped 20 percent since October, and its steady sales numbers, buoyed by evergreen favorites like Madden NFL 2004 and newcomers like Lord of the Rings: Return of the King, made it an attractive buy. "Electronic Arts' games are among some of the best movers at retail," said the Morgan report. "We see limited downside to the stock, and the potential for significant upside at current levels."

The rally carried over to game retailers as well. Electronics Boutique climbed $1.25 (6.22%) to $21.35, while GameStop gained $0.84 (5.81%) to close at $15.30.