On Friday, Roth/MKM made an adjustment to the price target for Take-Two (NASDAQ:TTWO) Interactive (NASDAQ:TTWO), bringing it down to $180 from the previous target of $185. Despite this reduction, the firm continues to recommend a Buy rating for the stock. The adjustment follows the announcement that the highly anticipated game, Grand Theft Auto VI (GTA VI), will now be released in fiscal year 2026 instead of the earlier expected timeline.
The firm acknowledges that Take-Two's guidance for fiscal year 2025 was substantially lower than anticipated. Nevertheless, analysts at Roth/MKM believe that the clarified timeline for GTA VI's release should be regarded as a positive development. The firm suggests that this new information helps clear uncertainties about the game's arrival on the market.
Roth/MKM also highlights the increased number of game releases as a positive sign, indicating that Take-Two's development pipeline has reached a critical turning point. This perspective suggests that the company is entering a phase of growth due to its expanding portfolio of games.
The new price target of $180 is based on a multiple of 26.5 times the firm's projected earnings per share (EPS) over a forward-looking three-year average, or 22 times the estimated EPS for fiscal year 2026. This valuation reflects the firm's confidence in Take-Two's growth prospects over the next few years.
InvestingPro Insights
As Take-Two Interactive (NASDAQ:TTWO) navigates the postponement of Grand Theft Auto VI, real-time data from InvestingPro offers a snapshot of the company's financial health. With a market capitalization of $24.92 billion, Take-Two's current Price/Earnings (P/E) ratio stands at -17.08, reflecting market sentiments about its earnings potential. Despite recent challenges, the company has demonstrated a solid revenue growth of 11.64% over the last twelve months as of Q3 2024, indicating its ability to increase sales amidst a dynamic gaming industry.
InvestingPro Tips further reveal that Take-Two operates with a moderate level of debt and has been non-profitable over the last twelve months. However, analysts predict the company will return to profitability this year. Additionally, with the stock trading at a high revenue valuation multiple and the company not paying dividends, investors may be focused on growth prospects rather than immediate returns.
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