There's one fewer Wall Street believer in GameStop (NYSE: GME).

Needham analyst Sean McGowan downgraded shares of the video game retailer yesterday.

It's odd that McGowan waited three weeks after the company's bleak fiscal fourth-quarter report to move the stock from buy to hold, taking down his revenue and profit targets over the next years. Shouldn't the weakness have been apparent then?

It's obviously not as simple as watching Best Buy's (NYSE: BBY) upheaval this week and just going one name lower on the corporate death pool, though there are similarities between Best Buy and GameStop. Best Buy is looking to close 50 superstores this year. GameStop is also looking to close out this year with 50 fewer stores. Both chains have seen historically robust comparable-store sales turn negative.

However, at least GameStop has responded somewhat effectively to the crisis. GameStop's trade-in business and PowerUp Rewards loyalty shopping program have helped keep customers close in a world where lower prices are a click away.

In the end, it won't matter. Both Best Buy and GameStop are doomed. It's just a matter of which one is rearranging the deck chairs the nicest at this point.

McGowan sees revenue falling to $9.4 billion this fiscal year. Until yesterday his projection was for GameStop's top line to grow from $9.55 billion to $9.89 billion. He's also slashing next year's revenue forecast -- from $10.1 billion to $9.625 billion -- but at least that implies growth. McGowan is slashing his profit estimates for this year, but moving them higher for next year despite slashing his revenue outlook. The chain has been buying back a ton of shares to keep its earnings buoyant on a per-share basis.

Optimists used to believe that Nintendo's (OTC: NTDOY) new Wii U console would reignite interest in an industry that has been sliding for most of the past three years, but McGowan doesn't feel that the Wii U -- or the new Xbox and PlayStation consoles that should follow next year -- will generate the boost that earlier generations have delivered.

Even if they do, the emphasis on digital delivery for software distribution in the next generation of gaming systems will sting GameStop in terms of both initial sales and its still-thriving resale business.

McGowan may be late to the party. GameStop has dropped plenty of clues, including slashing its same-store sales target three times over the past year. However, it's better to be late and right than early and wrong.

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Motley Fool newsletter services have recommended buying shares of Nintendo. Motley Fool newsletter services have recommended writing covered calls on GameStop. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.