Sunday, 28 April 2024

Is Take-Two Interactive Stock Going to $185? 1 Wall Street Analyst Thinks So.

by BD Banks

The stock of Take-Two Interactive (NASDAQ: TTWO), the video game company behind the long-running Grand Theft Auto (GTA) series, is a steal at its current price. That’s the belief of an analyst tracking the company, which was reiterated in a research note published in mid-April. He feels it has the potential to rise as much as 31% from its present level.

High anticipation tempered by uncertainty

This bull is Oppenheimer‘s Martin Yang, whose buy recommendation is accompanied by a $185 per share price target.

Yang is keeping both his recommendation and that price target steady, as he feels Take-Two’s immediate future is difficult to gauge. It has yet to release the highly anticipated GTA VI, the upcoming entry in what the analyst described enthusiastically as “the most anticipated game of the decade.”

That high anticipation is tempered by uncertainty about its release date — Take-Two’s latest official word on the matter had it that the video game would come out at some point in 2025. This makes it tough to gauge more exactly when the sure-to-be-strong revenue source will start to gush.

Meanwhile, the company’s latest earnings release featured an element no investor likes: a guidance cut. Its all-important tally for bookings — as the name implies, sales booked but not necessarily realized yet — is now expected to total $5.25 billion to $5.30 billion for its recently completed fiscal 2024. Previously, the company was forecasting $5.45 billion to $5.55 billion.

Waiting for the blockbuster

Due to the nature of their business, which leans heavily on releases of entries in top franchises like GTA, the financials of video game companies can be quite lumpy. Take-Two will surely have a blockbuster on its hands at whatever time it finally releases GTA VI, though I have the feeling that many investors will avoid the stock until hype for the game kicks into gear. I’m not as much of a bull as Yang on Take-Two’s short- to mid-term future.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Take-Two Interactive Software. The Motley Fool has a disclosure policy.