GameStop (GME) managed to post a surprising operating profit in the holiday quarter despite a significant drop in revenue, Wedbush said in a note Wednesday.

The company's interest bearing securities now yield roughly $220 million annually, accounting for nearly all its net income, the investment firm said.

Net operating losses have been trimmed to almost breakeven, with losses under $10 million in the past two fiscal years, Wedbush said.

Management's efficiency and disciplined operations suggest GameStop can achieve breakeven results in future quarters, the Wedbush analysts noted.

The trading card business, part of the collectibles segment, is expanding and is expected to remain stable or even grow, despite ongoing reductions in physical store locations, according to the note.

Wedbush maintained an underperform rating for GameStop and raised its price target to $11.50 from $10.

Shares of the company were up nearly 15% in recent trading.

Price: 28.64, Change: +3.24, Percent Change: +12.77