Shares in struggling computer gaming retailer GAME Group surged on Friday morning after it confirmed revised terms have been agreed with its lenders, but Peel Hunt has maintained its cautious stance on the stock.

GAME also said that the losses in the year to January 31st will not be as bad as expected. The full-year loss before tax and non-recurring items will be around £18m, well below Peel Hunt's previous forecast of a loss of £30m.

"Clearly, trading and opex savings have not improved. We can only assume that stakeholder support from key suppliers may have yielded some form of 'over rider' or volume discounts to improve year-end margins," said analyst John Stevenson.

"While the threat from downloading remains the key longer-term challenge, the most significant factor behind current performance is the console cycle rather than any digital threat, albeit the handheld market is clearly impacted by alternate technology," Stevenson notes.

Peel Hunt reiterates its hold rating and 5p target price.

GAME's shares had jumped 31.33% to 7p in morning trading.

BC

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