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MoffettNathanson upgraded Take-Two Interactive Software Inc (NASDAQ:TTWO) to an Outperform rating (From Market Perform) with a price target of $140.00 as analysts believe that the video game company has the means and opportunity to materially outperform expectations and affect a step-function higher in bookings and cash flow with new product.
MoffettNathanson’s downgrade of Take-Two to Market Perform last year on the announcement of its intention to acquire Zynga was predicated on the fact that it didn’t make much sense for Take-Two to acquire Zynga if there was great momentum in the product pipeline.
While Take-Two has been bragging about its pipeline for years; even as far back as the launch of Red Dead Redemption II in 2018, investor sentiment has soured. However, after a highly disappointing 2022, analysts believe that the long-awaited content cycle for Take-Two is right around the corner.
Of course, MoffettNathanson runs the risk of being early; a weak 2024 guide in May, or a further moving of the goal post for immersive core titles, etc., could spell some trouble. But something has to give on what Take-Two’s been working on over the last several years.
The analysts wrote in a note, “We don’t expect to get all that much detail about F’24 in a couple of weeks with F3Q’23 earnings. The initial F’24 guide will come with the FQ4 report in May. But because Take-Two has had to open the kimono in the Zynga process and speak to its now long-stated views on the “pipeline,” there are enough crumbs here to warrant near-term anticipation of a much more detailed view of the product pipeline, including formal announcements from Take-Two’s studios.”
Shares of TTWO are up 0.9% in pre-market trading on Friday.
