Shares of Take-Two Interactive Software Inc (TTWO) reached a new 52-week high of $22.91 on Jul 2, 2014. The bullish run reflects Take-Two Interactive’s innovative product pipeline and positive outlook.
The closing price of Take-Two Interactive on Jul 2 was $22.66, representing a strong one-year return of about 47.0% and a year-to-date return of more than 29%. The S&P 500 jumped 22.2% and 7.8%, respectively, during the same period. Average volume of shares traded over the last three months stands at approximately 2303.3K.
This Zacks Rank #3 (Hold) stock has a market cap of $2.25 billion and a long-term expected earnings growth rate of 12.5%.
Key Growth Catalysts
We believe that Take-Two’s robust pipeline is the key growth catalyst for fiscal 2015 and beyond. The company will benefit from the upcoming launch of NBA2K15, Evolve, next-gen WWE title, Borderlands: The Pre-Sequel and Civilization: Beyond Earth. We believe that Evolve, which won the Best Show award at the recently concluded Entertainment Expo (E3), will boost Take-Two’s top line in fiscal 2015.
Post the phenomenal success of Grand Theft Auto V in fiscal 2014, the company is expected to benefit from its release on next generation consoles from Microsoft (MSFT) and Sony. The online version is also expected to boost Take-Two’s top-line growth.
For fiscal 2015, the company expects non-GAAP net revenue to be in the range of $1.35 to $1.45 billion, while earnings are expected to be in the range of 80 cents to $1.05 per share. Both revenues and earnings per share are expected to significantly decrease on a year-over-year basis, due to modest growth expectations from Grand Theft Auto V.
Although Take-Two has a healthy product pipeline, we believe that it will be challenging for the upcoming games to repeat the success of Grand Theft Auto V in fiscal 2015. Moreover, Take-Two's overdependence on console sales and lack of mobile gaming titles is a major headwind.
Estimate Revision
The Zacks Consensus Estimate for 2014 has remained steady at 58 cents per share over the past 7 days. For fiscal 2015, the earnings estimate remained stable at 72 cents per share over the same period.
Other Stocks to Consider
Other better-ranked stocks that develop and publish video games are Electronic Arts (EA) and Activision Blizzard Inc (ATVI). Electronic Arts sports a Zacks Rank #1 (Strong Buy), while Activision Blizzard has a Zacks Rank #2 (Buy).
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