Game On: Analyst Forecasts Take-Two Interactive's Growth from Live Service, Mobile Bookings, and GTA Next

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  • Benchmark analyst Mike Hickey reiterates Take-Two Interactive Software, Inc TTWO with a Buy rating and a $120 price target.
  • The analyst balances execution risk favorably for the quarter, which should benefit from continued sales of live service and mobile net bookings growth (estimate: 105%), over a rationalized guidance view subsequent 3Q FY23 that now could prove conservative. 
  • He is optimistic that mobile trends will stabilize as TTWO laps macroeconomic pressure and engagement normalizes. 
  • The analyst identifies significant execution risk on upcoming Q1 FY24, and FY24 initiated guidance and has limited visibility on new game launches anticipated to drive growth. 
  • Given that the macroeconomic conditions may persist or worsen through FY24, the analyst has more modest expectations from mobile, live services, and premium games. 
  • Risk is somewhat offset by contracting consensus growth estimates and broadening awareness of presumed adverse guidance risk. 
  • The analyst has seen more evidence to believe in the launch of the GTA Next in FY25 and provide a significant catalyst for net bookings and profitability growth. 
  • He considers FY24 guidance as a potentially limited window for an opportunistic entry point where downside volatility on the release could be pronounced by short-lived. 
  • The analyst is optimistic about a potential reset on TTWO acquisition interest if Microsoft Corp MSFT can successfully navigate regulatory challenges and close its Activision Blizzard, Inc ATVI transaction. 
  • He is optimistic that generative AI can increase productivity, a potential profit growth catalyst. 
  • Price Action: TTWO shares traded lower by 1.42% at $119.26 on the last check Thursday.
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