Take-Two Price Targets Rise as Analysts Praise Strength of Its Franchises

(Bloomberg) -- Take-Two Interactive Software surged on Tuesday, after the video-game company reported first-quarter results that beat expectations and raised its full-year outlook.

Analysts were extremely positive on the results, with multiple firms raising their price targets and praising the strength of Take-Two's portfolio of intellectual property. The average target price on Wall Street gained to $134 Tuesday from $128 Monday, according to data compiled by Bloomberg.

Shares of Take-Two jumped as much as 11% in their biggest one-day percentage gain since October, and the rally took the stock to its highest level since November. The gain follows Take-Two's biggest one-day decline since February, which came as President Trump publicly blamed the video game industry for contributing to a culture of violence in the U.S.

Among other video-game stocks, Electronic Arts Inc. rose 2.1% while Activision Blizzard Inc. gained 1.9%.

Here's what analysts are saying about the results:

Morgan Stanley, Brian Nowak

The strength in the quarter “speaks to its multi-franchise momentum,” and “the company-wide platform is robust.”

Is particularly optimistic about Take-Two's NBA 2K game, which “continues to be the fastest growing ‘scaled' franchise” in Morgan Stanley's coverage.

Overweight rating, price target $140 from $130.

Jefferies, Alex Giaimo

The “encouraging” quarter “improves our confidence in the staying power of TTWO's core franchises.”

The magnitude of the upside surprise “exceeded our expectations,” and while valuation is “the biggest hurdle” to the stock, its fundamentals are strong and it has a “promising content slate ahead.”

Rated hold, price target $125 from $115.

Piper Jaffray, Michael Olson

“With strong Red Dead Redemption 2 unit sales, Take-Two has created a foundation for multiple years of ongoing revenue from Red Dead Online.” At the same time, there is “plenty of life left” in Grand Theft Auto Online.

The outlook looks conservative, given it doesn't include any material revenue impact from China, eSports or new mobile titles.

Rated overweight, price target $134 from $114.

Baird, Colin Sebastian

The bookings guidance “reflects expectations for faster growth in recurring online spending across the portfolio,” as well as higher confidence in Borderlands 3 and improving engagement with Red Dead Online.

Rated outperform, price target $135 from $109.

KeyBanc Capital Markets, Tyler Parker

The results “reiterated our confidence in the Company's ability to deliver on the live services trend across its strong portfolio of IP.”

The company is “best-in-class in terms of driving ongoing engagement and consumer spending,” and it is “set up well to continue delivering strong results and take advantage of its strong pipeline.”

Rated overweight, price target $150 from $145.

What Bloomberg Intelligence Says:

“Slowing gains for in-game content revenue and a lack of visibility to future releases are clouding Take-Two's long-term sales and profit-growth outlook.”

-- Analyst Matthew Kanterman

-- Click here for the research

To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper, Morwenna Coniam

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