How Take-Two Is Affected By The GTA V Delay

In a report published Wednesday, Cowen and Company analysts maintained their Market Perform rating on Take-Two Interactive Software Inc TTWO, with a price target of $32. In the report Cowen and Company noted, "We expect Thursday's NPD data to show that Evolve has gotten off to a soft start at retail…Based on our channel check methodology, we are projecting that Evolve sold just slightly less than 300K physical units in the U.S. in February. Even assuming a generous physical/digital split, we think the game will likely top-out at around 1.5MM units of total worldwide first-year sell-through." The analysts expressed concern regarding Rockstar's announcement of a delay in the PC version of GTA V to April 14. "Two weeks ago Rockstar announced that the PC version of GTA V would be delayed for the third time, slotting a new release date of April 14…This latest delay is a short one, but will push the title out of F15. We were (we think conservatively) modeling it for 1MM units of sell-in in the quarter, mostly via the high margin digital channel," the analysts explained. "While the delay will not be important in the long run, it does highlight the fact that projecting results for Take-Two has always been challenging due to the company's propensity for missing ship dates." The non-GAAP revenue and EPS estiamtes for FY15 have been reduced from $1.70B to $1.62B (vs. guidance of $1.65B-$1.70B) and EPS from $1.77 to $1.52 (vs. guidance of $1.65-$1.75), respectively.