Take Two Interactive May Be One Of 'Best In Video Game Sector,' But What Do These 3 Analysts Think?

Analysts reacted to the first-quarter earnings report of Take-Two Interactive Software Inc TTWO and shared thoughts on the pipeline of content to come.

The Take-Two Analysts: Raymond James analyst Andrew Marok had a Market Perform rating and no price target.

Credit Suisse analyst Stephen Ju had a Neutral rating and lowered the price target from $211 to $210.

Barclays analyst Mario Lu had an Overweight rating and a $210 price target.

The Earnings Takeaways: Mobile gaming was a bright spot mentioned by Marok along with the success of the Grand Theft Auto franchise.

An update to the “Grand Theft Auto V” game saw record engagement based on day one and seven days after the release.

“Engagement trends are solid into F2Q22 as the Los Santos Tuners update for GTOnline set a game record for bookings,” Marok said.

“Grand Theft Auto V” sold over five million copies in the first quarter bringing its cumulative total past 150 million copies, Ju highlighted. The success of the franchise helped turn in results ahead of expectations and was one of the positive noted by Ju.

Bookings growth of 4% and earnings per share growth of 13% year-over-year were both ahead of street estimates, Lu said.

Updates for Grand Theft Auto V and Red Dead Online were the keys mentioned by Lu. Red Dead Online had the highest number of players in history with its recent update. Grand Theft Auto is seeing strong engagement in the second quarter, Lu noted.

GTA Online's audience size rose 72% year-over-year and Red Dead Online’s audience was up 18% year-over-year.

Related Link: 2 Video Game Stocks To Buy And 1 To Watch For Strength In Sector Says Analyst

What’s Next: Take-Two’s guidance showed a heavy lineup of game content, but also signs of delays, including two immersive titles planned for later in 2021.

Marok said the optimism from the company on engagement was enough to push aside fears on the timeline of the game releases.

“The key development this quarter was the changes in the anticipated release slate,” Ju said.

The strong engagement of “Grand Theft Auto V” early in the second quarter is the key for Lu.

“Player engagement thus far in F2Q remains robust as GTA Online saw its largest number of players and the highest level of bookings in days 1 and 7 of an update,” Lu said.

The analyst calls TTWO one of the best picks in the video game sector.

Price Action: TTWO shares are down 7.71% to $159.86 on Tuesday.

Photo: Courtesy of Grand Theft Auto