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After Take-Two Interactive reported its November results, we updated our fair value. We lowered our rating from Buy to Watch. We have added the potential delay of the PC version for Grand Theft Auto VI to what we track, as the game is currently confirmed only for PlayStation and Xbox. We also added the $58 million tax benefit that significantly narrowed the reported net loss this quarter to our review, as this one-off gain masked a deeper $118 million operating loss from running the game studios.
UBS set its target for the stock at $295, joining a group of analysts who expect the price to rise as the company enters its next major release cycle. This new target is higher than the current average of $287 across all firms. While a price target is just one firm's estimate of what the stock is worth, it reflects growing confidence in the company's ability to grow its earnings. The stock is currently trading around $220, meaning analysts generally see significant room for the price to move up from here.
Source: UBS
Take-Two brought in $1.5 billion in revenue this quarter, which was lower than the $1.62 billion analysts expected. The company also reported a loss of 29 cents per share. These numbers matter less than usual because the business is currently in a waiting period before its next major release cycle begins.
Management confirmed that Grand Theft Auto VI is scheduled to launch on November 19. Pre-orders for the game have reached record levels, which supports the view that this release will significantly change the company's financial scale. The company kept its full-year forecast for net bookings, a measure of products and services sold, at about 8.1 billion dollars.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
The company is scheduled to share its results after trading ends today. Analysts are looking for revenue of about 1.62 billion dollars and earnings of 0.97 dollars per share. For a long-term owner, the most important part of the report will be any update on the timing for Grand Theft Auto VI, which is currently slated for Fall 2025. We will also be watching for signs that players are continuing to spend money within existing games like NBA 2K, which provides the steady cash flow the company needs while it finishes its major projects.
Piper Sandler set its price target for the game publisher at $290 on Monday. This is roughly in line with the average analyst target of $292 and sits significantly higher than the current stock price of about $195. While a price target is just one firm's estimate of what a stock is worth, it shows continued confidence in the company's path as it nears its next major release cycle. Most analysts remain focused on the expected launch of Grand Theft Auto VI next year, which is the primary driver for the company's future growth.
Source: Piper Sandler
Management has missed its own profit targets for two straight quarters as they focus on a massive launch. This suggests the business is in a heavy spending phase that is harder to forecast.
| Expectation | |
|---|---|
| EPS | $3.90 |
| Revenue | $3.61B |
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