4 Take-Two Analysts On Q3 Results, Long-Term Story, Strength In 'Grand Theft Auto V,' 'NBA 2K'

Take-Two Interactive Software TTWO analysts say they're left with unanswered questions about the video game stock's long-term story following its third-quarter earnings report on Monday. 

Take-Two's Q3 Print: Take-Two's third-quarter revenue of $860.9 million came in ahead of Street estimates of $747 million. Adjusted earnings per share of $1.24 beat the estimate of 96 cents per share for the third quarter.

The Take-Two Analysts: Credit Suisse analyst Stephen Yu maintained a Neutral rating on Take-Two and raised the price target from $199 to $204.

Raymond James analyst Andrew Marok maintained a Market Perform rating. 

Morgan Stanley analyst Brian Nowak has an Overweight rating and $215 price target.

KeyBanc Capital Markets analyst Tyler Parker has a Sector Weight rating. 

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Take-Two Has Strength In Largest Games: “Grand Theft Auto V” surpassed 140 million units sold lifetime-to-date in the third quarter. “NBA 2K21” has sold 8 million units. “Red Dead Online” hit a new high for new players in the month of December. And “Grand Theft Auto Online” hit its highest participation rate with year-over-year growth of 28%, Raymond James' Marok said in a note. 

Gamer engagement and monetization was strong in the third quarter and the highlight for Morgan Stanley's Nowak.

Players were retained and hit records in the third quarter across several franchises, the analyst said.

Take-Two lags Activision Blizzard Inc ATVI in terms of in-game revenue.

Nowak said he expects Take-Two to close the gap with the continued strength of the Grand Theft Auto and NBA2K franchises.

“Grand Theft Auto V” is coming to next-gen consoles in the second half of calendar 2021, and a new standalone “Grand Theft Auto Online” launch is coming exclusively to the Playstation 5 from Sony Corp SNE for three months later in 2021.

What’s Next For Take-Two: Content investment and innovation are critical to bringing upside to Take-Two while customers and investors wait for the next Grand Theft Auto game, Nowak said. The analyst projects "Grand Theft Auto VI" coming in calendar year 2023.

Take-Two’s pipeline consists of 72 PC/console games and 21 mobile games, the analyst said. 

KeyBanc's Parker said Take-Two is expensive without knowing much about fiscal year 2022, adding that the risk-reward is more neutral at current levels.

"We think it’s expensive to own right now and remain Sector Weight until we know more about the upcoming slate." 

TTWO Price Action: Shares of Take-Two were down 5.77% at $201.03 at last check Tuesday.