On Monday, MoffettNathanson shifted its stance on Take-Two (NASDAQ:TTWO) Interactive (NASDAQ:TTWO), downgrading the video game publisher from a "Buy" to a "Neutral" rating. Alongside the rating change, the firm also adjusted its price target to $167 from $169. The analyst cited a mix of anticipation for the upcoming Grand Theft Auto VI (GTA 6) and industry-wide concerns as reasons for the new position.
The analyst noted that while there is considerable excitement around the announcement of GTA 6, this is counterbalanced by the reality of job losses within the gaming industry and increasing costs that impact overall growth. The statement acknowledged the potential for GTA 6 to exceed high expectations but also recognized that any delay in its release, while not catastrophic, is unlikely to serve as a positive catalyst for the stock.
Take-Two has experienced a significant uptick in its stock value over the past year, which the analyst finds challenging to reconcile with the current industry environment. The firm's analysis suggests that for further significant gains in valuation, Take-Two's broader portfolio would need to outperform expectations or the new iteration of GTA Online would have to be exceptionally successful.
The analyst's commentary highlighted the importance of Take-Two's focus on delivering what is anticipated to be the largest video game launch in history, suggesting that speculation on future developments should not detract from this goal. The decision to downgrade reflects a cautious approach, with the firm indicating it might be a prudent time to pause investment in Take-Two as market multiples have increased without a corresponding rise in long-term fundamental estimates.
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