On Thursday, BofA Securities made a bullish move on Take-Two (NASDAQ:TTWO) Interactive (NASDAQ:TTWO), upgrading the stock from Neutral to Buy and increasing the price target to $185 from $160. The firm's revised outlook is based on the anticipation of new game releases and the potential for an update on the highly anticipated Grand Theft Auto 6 (GTA 6).
The analyst at BofA Securities indicated that Take-Two now has the catalysts necessary to attract investors, a sentiment not held during their previous downgrade on December 7. The upcoming release of two major sequels in fiscal year 2025, other than GTA 6, is seen as a significant draw for the company at its current valuation.
The firm also expects that Rockstar Games, a subsidiary of Take-Two, will likely tease progress on GTA 6 by the holiday season of 2024, with the possibility of a trailer, blog post, or tweet. Such a tease is anticipated to potentially lead to upgraded consensus estimates for the company's fiscal year 2026 top line.
Additionally, the scheduled fiscal year 2025 launch of Borderlands 4, which is one of the biggest franchises under Take-Two's 2K label, is expected to bolster confidence in the management's conservative approach, especially if a Fall 2025 launch of GTA 6 is assumed.
InvestingPro Insights
As Take-Two Interactive (NASDAQ:TTWO) captures the market's attention with its upgraded status from BofA Securities, investors are considering the company's financial metrics and analyst projections to gauge the stock's potential. According to InvestingPro data, Take-Two has a market capitalization of $25.81 billion and a high EBITDA valuation multiple, which suggests that the market has high expectations for the company's future earnings. Despite a slight revenue decline over the last quarter, the company's gross profit margin remains strong at 54.75%, reflecting its ability to maintain profitability in its core operations.
InvestingPro Tips indicate that Take-Two is expected to become profitable this year, with analysts revising earnings downwards for the upcoming period, which could signal a cautious but optimistic outlook. The stock's low price volatility could appeal to investors who prefer stability, while its moderate level of debt provides some assurance regarding the company's financial health. Notably, Take-Two does not pay a dividend, which may influence investors who prioritize income generation in their portfolios.
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