Take-Two Interactive Benefits From 'Industry Tailwinds,' Analyst Says After Q4 Report

Take-Two Interactive Software, Inc. TTWO reported fourth-quarter and full-year fiscal 2020 results Wednesday, with year-over-year GAAP net revenue growth of 41% and a 40% increase in consumer spending thanks to titles like "NBA 2K20," "Grand Theft Auto V" and "Red Dead Redemption 2." 

Total net bookings rose from $2.929 to $2.99 billion year-over-year. 

"Our significantly better-than-expected fourth quarter results concluded another extraordinary year for Take-Two, during which we achieved numerous milestones, including record Net Bookings of nearly $3 billion, as well as record digitally-delivered Net Bookings, Net Bookings from recurrent consumer spending, and earnings," Strauss Zelnick, Take-Two's chairman and CEO, said in a statement. 

The Take-Two Analysts 

Morgan Stanley's Brian Nowak maintained with an Overweight rating on Take-Two with a $150 price target. 

Oppenheimer's Andrew Uerkwitz maintained with an Outperform rating and lifted the price target from $145 to $155. 

MKM Partners analyst Eric Handler maintained with a Neutral rating and price target bumped from $124 to $145. 

The Take-Two Takeaways

Take-Two "stands to benefit from both company-specific factors as well as industry tailwinds driving both top-line growth and profitability gains," Oppenheimer's Uerkwitz said in a Wednesday note. 

The video game developer is poised for refreshes of several important franchises in next five years, the analyst said. 

"A build in internal development capacity will help generate revenue consistency." 

Morgan Stanley's Nowak said Take-Two's strength "was broad-based across franchises, with 'GTA Online,' 'NBA 2K' digital, and 'Red Dead Redemption 2' all growing faster than expected."

Take-Two will continue to see growth on the basis of "best in class content and a large, engaged, and relatively under-monetized player base," the analyst said.  

MKM Partners analyst Handler said "revenue upside was fueled mostly by recurrent consumer spending which paced by record performances from 'NBA 2K' and 'GTA Online.'"

The analyst anticipates growth from "NBA 2K" in 2021, but said results will likely be offset by declines in other franchises. 

TTWO Price Action 

Take-Two shares were up 1.87% at $140.78 at the time of publication Friday. 

Photo courtesy of Take-Two.