Out of the Gate: Blockbuster jumps on buyout's end

Blockbuster shares surged 35 cents, or 14 percent, to $2.86. Circuit City shares tumbled 38 cents, or 14.5 percent, to $2.18.

Late Tuesday, Blockbuster called off its more than $1 billion bid to buy Circuit City, saying the buyout didn't make sense in the current market.

In a note to investors, Citi Investment Research analyst Tony Wible said Blockbuster shareholder opposition coupled with weak earnings at Circuit City likely sank the deal.

However, Blockbuster remains on-track to meet its business goals even without the Richmond, Va., company, he said. Wible maintained his "Speculative Buy" rating and assigned a $8.50 price target on Dallas-based Blockbuster, saying it will continue to benefit from its "Total Access" model and strong title lineup, among other factors.

The price target implies he expects shares to more than triple in value from their Tuesday close of $2.51. Blockbuster shares are off more than 35 percent since the start of the year.

Blockbuster said it will still try to combine its current offerings of movies and games with the sale of electronic devices at its own stores. Circuit City, meanwhile, said its board is still exploring strategies to help shareholders without Blockbuster's presence.

Shares of the No. 1 movie rental chain have plunged 20 percent since the bid was announced in April, while Circuit City shares have lost about half their value since the one-day rally spurred by the offer.