Market Overview

Why Bernstein Thinks Take-Two Is Set To Outperform

Share:
Why Bernstein Thinks Take-Two Is Set To Outperform

Take-Two Interactive Software Inc. (NASDAQ: TTWO) is the video game holding company responsible for the production of game franchises like "Grand Theft Auto" and "Bioshock." The company faces strong competition from Activision Blizzard, Inc. (NASDAQ: ATVI) and Electronic Arts Inc. (NASDAQ: EA).

The Analyst

Bernstein analyst Todd Juenger initiated Take-Two Interactive with an Outperform rating and a $175 price target.

The Thesis

According to Juenger, video game franchises with the most potential for sustainability have three main factors, including:

  • Breadth, benefiting most from community and networking.
  • Durability, which provides insulation from competition.
  • Optionality, which gives the company options to grow into both breadth and durability.

Take-Two offers all three even with it's relatively small market cap of $14 billion, with such franchises as "Grand Theft Auto," "NBA 2K" and "Red Dead Redemption."

"Grand Theft Auto" has defined a very specific genre that had never before been created, Juenger said. The latest release sold 100 million units and generated over $6 billion, making it the highest grossing video game of all time.

"NBA 2K" continues to outsell EA’s "NBA Live" due to its durability, annual releases and strong in-game transaction proposition. Juenger expects the latest launch of "Red Dead Redemption" to sell 25 million units.

“Management is fond of saying that the company is constrained primarily by development capacity. Part of this is due to TTWO's particular development style and quality control. The company is clearly more interested in game quality than game quantity.”

Price Action

Shares of Take-Two Interactive were down 2.7 percent to $124.20 at time of publication Wednesday.

Related Links:

Take-Two Beats Q4 Estimates, Pushes Back 2K Game: Analysts Weigh In

EA Shares Fall On 'Battlefield' Delay, Updated Guidance

Photo credit: RockStar Games, "Red Dead Redemption 2" screens

Latest Ratings for TTWO

DateFirmActionFromTo
Oct 2019MaintainsOverweight
Oct 2019Initiates Coverage OnNeutral
Sep 2019MaintainsBuy

View More Analyst Ratings for TTWO
View the Latest Analyst Ratings

Posted-In: Bernstein BioShock EA Games gamingAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga

 

Related Articles (ATVI + EA)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
YEXTMorgan StanleyMaintains15.0
WKMorgan StanleyMaintains42.0
RAMPMorgan StanleyMaintains58.0
PDMorgan StanleyMaintains34.0
HTHTDaiwa CapitalDowngrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
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.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
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 vipaccounts@benzinga.com

Broadcom Says A Fraudulent DoD Memo Circulated Among Senators, Congress

The VIX Is Up 60% In A Week, Highest Level Since June