Skip to main content

Market Overview

Take-Two's 'Red Dead' Is Up Against 'Lofty Expectations,' BMO Says In Downgrade

Take-Two's 'Red Dead' Is Up Against 'Lofty Expectations,' BMO Says In Downgrade

The case for no longer being bullish on video game maker Take-Two Interactive Software, Inc (NASDAQ: TTWO) is based on concerns that Wall Street's "Red Dead" sales expectations are overly optimistic, according to BMO.

The Analyst

BMO Capital Markets' Gerrick Johnson downgraded Take-Two Interactive from Outperform to Market Perform with a price target lowered from $135 to $116.

The Thesis

Take-Two's latest game, "Red Dead Redemption 2," is expected to sell between 15 million and 18 million units throughout fiscal 2019 on top of 25 million units sold in the first 12 months -- with some estimates as high as 30 million, Johnson said in a note. The analyst is modeling for a "solid performance" of 15 million unit sales in fiscal 2019 and 17.5 million in the first 12 months, which implies the company is up against "lofty expectations."

On top of high sales expectations, Johnson said it's likely "Red Dead" would steal players and net bookings away from the company's other franchise game "Grand Theft Auto." In fact, recent declines in performance metrics at "GTA" indicates an "increase in this likelihood."

Take-Two's management team called out during its Q4 conference call weakness in its "NBA 2K" franchise for a top-line miss versus its guidance. Surprisingly, the company "usually doesn't underperform" against its typically conservative expectations and comes at a time when the game's performance in the eSports category has so far "been a disappointment."

Price Action

Shares of Take-Two were trading around $113.24 at time of publication.

Related Links:

Stifel: Gamemakers Survive 'Fortnite' Ambush, Are A Buy Ahead Of Earnings

No Playing Around: Video Game ETF Is On A Roll

Image credit: meristation [CC BY-SA 4.0], via Wikimedia Commons

Latest Ratings for TTWO

Feb 2021Wells FargoMaintainsOverweight
Feb 2021WedbushMaintainsOutperform
Feb 2021Cowen & Co.MaintainsOutperform

View More Analyst Ratings for TTWO
View the Latest Analyst Ratings


Related Articles (TTWO)

View Comments and Join the Discussion!

Posted-In: BMO Capital Markets eSportsAnalyst Color Downgrades Price Target Top Stories Analyst Ratings Media Best of Benzinga

Latest Ratings

VZIOWells FargoInitiates Coverage On31.0
OMWells FargoInitiates Coverage On63.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at