Take-Two 'Outexecuting Its Peers,' Says Bullish MKM Partners

MKM Partners lowered its price target for video game maker Take-Two Interactive Software, Inc (NASDAQ: TTWO) Friday based on contraction in the overall video game market, but remains bullish on the stock due to the expected success of "Red Dead Redemption 2." 

The Analyst

MKM Partners analyst Eric Handler maintained a Buy rating on Take-Two and lowered the price target from $160 to $130. 

The Thesis

The "Red Dead Redemption 2" wild west adventure game — which pulled in more than $700 million in sales in just three days when it was released in the fall — gives the company its best opportunity for long-tail success, Handler said in the note.

Other coming positives include the expected releases of "Borderlands 3" and a new space colony game series, "The Outer Worlds," the analyst said. 

Other drivers of Handler’s bullish outlook include continued gains in recurrent revenue from the "NBA 2K" franchise and "GTA Online."

“Near term, we believe Take-Two is out-executing its peers and should exceed our consensus projections for 3QFY19 and FY19."

MKM believes 2020 earnings per share could be even larger than 2019, citing ongoing revenue opportunities from "Red Dead Online 2" and the new revenue from "Borderlands 3" and "The Outer Worlds," the analyst said. 

Price Action

Take-Two Interactive was up 2.18 percent at $103.70 at the close Friday.

Related Links:

Take-Two's 'Red Dead Redemption 2' Has Blockbuster Release Weekend

Why Bernstein Thinks Take-Two Is Set To Outperform

Photo courtesy of Rockstar Games.