Game On: Analyst Forecasts Take-Two Interactive's Growth from Live Service, Mobile Bookings, and GTA Next

Benchmark analyst Mike Hickey reiterates Take-Two Interactive Software, Inc TTWO with a Buy rating and a $120 price target.
The analyst balances execution risk favorably for the quarter, which should benefit from continued sales of live service and mobile net bookings growth (estimate: 105%), over a rationalized guidance view subsequent 3Q FY23 that now could prove conservative.
He is optimistic that mobile trends will stabilize as TTWO laps macroeconomic pressure and engagement normalizes.
The analyst identifies significant execution risk on upcoming Q1 FY24, and FY24 initiated guidance and has limited visibility on new game launches anticipated to drive growth.
Given that the macroeconomic conditions may persist or worsen through FY24, the analyst has more modest expectations from mobile, live services, and premium games.
Risk is somewhat offset by contracting consensus growth estimates and broadening awareness of presumed adverse guidance risk.
The analyst has seen more evidence to believe in the launch of the GTA Next in FY25 and provide a significant catalyst for net bookings and profitability growth.
He considers FY24 guidance as a potentially limited window for an opportunistic entry point where downside volatility on the release could be pronounced by short-lived.
The analyst is optimistic about a potential reset on TTWO acquisition interest if Microsoft Corp MSFT can successfully navigate regulatory challenges and close its Activision Blizzard, Inc ATVI transaction.
He is optimistic that generative AI can increase productivity, a potential profit growth catalyst.
Price Action: TTWO shares traded lower by 1.42% at $119.26 on the last check Thursday.

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