Take-Two Stock Analysts See Robust Game Pipeline, Conservative Guidance After Q4 Report

Video game company Take Two Interactive saw strong bookings growth in the fourth quarter from its key franchises.

Analysts see a strong pipeline ahead and said conservative guidance from the company could point to upside ahead.

The Take-Two Analysts: Raymond James analyst Andrew Marok has a Market Perform rating on Take-Two Interactive Software Inc TTWO.

Barclays analyst Mario Lu has an Overweight rating and $230 price target.

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

Take-Two Q4 Highlights: Take-Two reported bookings and earnings per share Tuesday that were ahead of Street estimates for the fourth quarter. Strength came from the company’s NBA2K and Grand Theft Auto franchises.

“Engagement trends were also strong – GTA Online reached a record number of active players and Red Dead Online active players increased significantly following the launch of the standalone version of the title,” RayJay's Marok said in a note. 

"Grand Theft Auto V" sold another 5 million units in the first quarter and has sold 145 million units in total. 

“We think bodes well for the potential conversion and upgrade to the upcoming version of GTA V and GTA Online on November 11, 2021 for next gen consoles,” said Barclays analyst Lu.

Related Link: Could Grand Theft Auto VI Be Coming Soon? ViewerAnon Shares The Details

Take-Two Analysts On The Game Pipeline: The highlight for the analysts from the fourth-quarter report was the company’s pipeline of games.

The pipeline for fiscal 2022 includes four immersive core titles, one independent release, 10 mobile titles and six new iterations of previously released titles.

Take-Two guided for 40 titles to be released in fiscal 2023 and fiscal 2024, implying around 20 titles a year.

“We continue to believe content investment and innovation is critical to attracting/retaining gamers and wallets as the world reopens,” said Morgan Stanley's Nowak. 

Nowak says the multiyear pipeline for Take-Two is flush and includes over 60 titles in the next two-and-a-half years.

“We see this strong robust pipeline and TTWO’s strong history of execution to give support to the multiple investors are willing to pay for TTWO,” he said. 

The analyst expects that the highly anticipated "Grand Theft Auto VI game will be included in the fiscal 2024 pipeline.

What’s Next For Take-Two: The analysts pointed to Take-Two guidance for the full-year being below estimates, but said this could be conservative on the company's part. 

Marok sees Take-Two shares as fairly valued, with a premium valuation currently implied. 

Lu said: "We think there is significant upside to both the bookings and EPS guide as we think it likely implies NBA2K and GTA Online RCS will be down year-over-year." 

TTWO Price Action: Shares of Take-Two Interactive were up 6.87% at $179.21 ahead of the close Wednesday.