On Wednesday, UBS reiterated its neutral rating on shares of Take-Two (NASDAQ:TTWO) Interactive (NASDAQ:TTWO) with a consistent stock price target of $151.00. The firm outlined its expectations for the company's fiscal fourth quarter, predicting a 6% decline in bookings, which aligns with management's guidance of a 6-9% decrease and marks a slight improvement from the previous quarter's 3% drop.
Adjusted operating income is anticipated to fall significantly, by over 70%, due to increased marketing expenses for the game "Match Factory!"
The analysis highlighted the solid performance and engagement with titles such as "Grand Theft Auto" (GTA) and "Red Dead Redemption 2" (RD 2), but noted a weaker showing from the NBA franchise and an uptick in mobile in-app purchases (IAP).
The forecast includes a slight increase in mobile estimates. Attention is also directed towards fiscal year 2025 guidance, where management has hinted at bookings slightly above $7 billion, a downward revision from initial expectations of over $8 billion, largely due to shifts in title releases.
The report addressed the speculation surrounding the launch of "GTA VI," suggesting that the anticipated bookings ramp incorporates the release of the new title. However, it also referenced recent media reports hinting at potential delays following news of a return-to-office mandate at Rockstar Games, the publisher of "GTA VI."
For the first quarter of fiscal 2025, UBS anticipates improved bookings and recurring consumer spending (RCS) trends, with estimates showing a slight decrease compared to the more significant declines experienced in the fourth quarter. This outlook is supported by stronger mobile performance and heightened sales and marketing efforts.
InvestingPro Insights
As investors digest UBS's neutral stance on Take-Two Interactive (NASDAQ:TTWO), real-time data and InvestingPro Tips offer additional context for the company's financial health and market performance.
According to InvestingPro, Take-Two's market capitalization stands at $25.02 billion, indicating its substantial presence in the gaming industry. Despite a challenging period, the company's revenue growth over the last twelve months as of Q3 2024 was 11.64%, showcasing its ability to increase sales amidst industry headwinds.
InvestingPro Tips highlight that Take-Two operates with a moderate level of debt and does not pay a dividend, suggesting a focus on reinvesting earnings into growth and development. Analysts predict that the company will return to profitability this year, which could be a pivotal factor for investors considering the stock's future trajectory.
Notably, Take-Two has delivered a high return over the last decade, reflecting its long-term growth potential.
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