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Merrill Lynch Take-Two Interactive $TTWO Note, Raises Price Target
Take-Two soundly beats fiscal second quarter and raises fiscal year 2018 outlook as Grand Theft Auto and NBA2K drive a strong digital quarter. Fiscal year 2019 outlook looking increasingly conservative given Fiscal 2018 digital upside. We estimate $800 million in free cash flow. Reiterate Buy, raise price objective; Remains top pick in the sector on franchise quality, digital trends, and potential upside.
Merrill Lynch raised price target to $127 from $106
[b]Piper Jaffray analyst Michael Olson maintaining an overweight rating & Raising Price Target[/b
>Raising his 12-month price target to $125 from $110.
“With Red Dead 2 delayed until the spring, 2018 guidance continues to be driven by growth of higher-margin digital revenue from increasing full game downloads, and recurrent consumer spending on GTA Online and NBA 2K,” “We believe there are three components of Take-Two’s business that, when combined, have the potential to drive upside to estimates in the coming quarters and years: recurrent consumer spend, full game downloads, and two ‘call options’ (mobile & eSports).”
Olson wrote in a note to investors.
BTIG analyst Brandon Ross initiated coverage of video game software stocks Monday.
Rated Activision Blizzard (ATVI) and Take-Two Interactive Software (TTWO) as buy and Electronic Arts (EA) as neutral, positive on the video game industry overall.
“Video game stocks have had a multiyear run as profits have climbed higher and multiples have expanded,” Ross said in a report. “While some investors believe the group is nearing a top, we believe there is still significant upside for publishers.”
Ross set 12-month price targets of Activision at 80 and Take-Two at 142 with no target for EA.
“Game publishers are benefiting from the transformation of video games from stand-alone packaged media to connected entertainment services”, Ross said.
Activision Blizzard hit game this holiday season is “Call of Duty: WWII.” It also is doing well in translating its PC and console game franchises into mobile games and esports, Ross said.
Take-Two is positioned for strong sales of its upcoming Western action game “Red Dead Redemption 2” and its “Grand Theft Auto” franchise, Ross said.
EA should benefit from industry tailwinds, but has faced questions about its execution. For instance, it was forced to halt in-game microtransactions in its big game “Star Wars Battlefront 2” in response to customer complaints. Gamers complained that EA’s microtransactions in the title, released Friday, amounted to a “pay-to-win” scheme.
Source: IBD
“Game publishers are benefiting from the transformation of video games from stand-alone packaged media to connected entertainment services”, Ross said.
The explanation is this
before when you bought a video game, you generally bought the expansion pack that followed a few months later. What video game developers have done now is sell at full price part of a game and then you can make in game purchases.CAD $69.99 Grand Theft Auto V —the game
CAD $119.99 Grand Theft Auto V and Criminal Enterprise Starter Pack Bundle
The fastest way for new Grand Theft Auto Online players to jump start their criminal empires. Get access to a huge range of the most exciting and popular content in GTA Online including properties, businesses, weapons, vehicles and more – over GTA$10,000,000 in value.2 in game purchases
CAD $19.99 Great White Shark Cash Card to gain $1,250,000 in-game GTA dollars to spend in GTA Online.
CAD $169.99 Save by purchasing this bundle of Grand Theft Auto V and a Megalodon Shark Cash Card worth $8,000,000 in-game to spend in GTA Online.All video games are doing this.
Couple weeks ago I downloaded the app Need for Speed No Limits by Electronic Arts, for free.
Usually this game would be about $60 but cars run off fuel and you start with 10 fuel and races cost fuel. You can buy gold in the game to buy parts for the cars as upgrades or wait for the fuel to refill. You can play the game freely, and get decently far without using real money…but who is going to share on social media that “hey I reached level 40” while others have bought their way to level 100 and have all the new cars fully upgraded.
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