Photo by Phillip Pessar via Wikimedia. 

GameStop shares have rallied over the last two days, likely due to strong interest from retail traders once again. One analyst is out with a bearish take on the gaming retailer.

The GameStop Analyst: BofA Securities analyst Curtis Nagle reiterated an Underperform rating on GameStop Corp GME with a $10 price target. 

The GameStop Takeaways: GameStop is seeing strong interest from retail traders once again, Nagle said in a Friday time.

The difference this time is that the trades are not being made for the same reasons, the analyst said.  

“GME’s current short interest is close to 25% of shares outstanding compared to over 100% in January. To put that into another context, GME’s trading volume over the past two days is around 15x the current number of shares short,” he said.  

Retail traders used a David vs. Goliath story of taking on hedge funds who were short the stock during January’s rally.

A turnaround for the struggling physical gaming retailer is an uphill battle, Nagle said. 

GameStop has negative EBITDA and declining engagement, the analyst said — two factors that could slow a turnaround.

Nagle also questioned whether a push into online sales could help the company, as it may at the cost of hurting the company’s high-margin pre-owned and collectible segments.

BofA's price target is based on 8x fiscal 2022 EV/EBITDA. The company’s five-year average of the EV/EBITDA metric is 4x versus an average of 10x from the hardlines category.

GME Price Action: Shares of GameStop were down 2.42% at $106 at last check Friday.