Initial Decline Explained
Jefferies' Timothy O'Shea commented in a research report that Take-Two's initial decline is due to the company postponing its "Red Dead" video game from fall 2017 to spring of 2018. The analyst doesn't believe the delay is due to a low-quality game but merely "a fact of life in this industry."
O'Shea noted that a similar event occurred years ago when "Grand Theft Auto V" was delayed by six months back in January 2013. Since then the game sold more than 75 million units, which helped contribute to the stock more than quintupling in value.
O'Shea continued that the math behind the delay is $25 million by assuming a net present value on $500 million in revenue slipping six months at a 10 percent discount rate. The analyst is also assuming development costs will increase by around $20 million. As such, the rough estimates imply the stock should have seen a reaction to the downside of less than 1 percent.
Jefferies maintains its Buy ratings and price target at $65.00.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Date | ticker | name | Actual EPS | EPS Surprise | Actual Rev | Rev Surprise |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.