Analysts at Wolfe Research initiated coverage on Take-Two Interactive (NASDAQ: TTWO) with an Outperform rating, setting a price target of $186.00 for the stock. As a result, shares gained more than 2% intra-day today.
Wolfe’s analysis extends beyond the immediate impact of Grand Theft Auto (GTA). The analysts emphasized the significant contribution of Take-Two’s other game franchises to the company’s multi-year outlook. They recall that following the release of GTA V in 2013, Take-Two’s non-GTA-related revenue experienced a 32% year-over-year decline. However, they pointed out that in the subsequent years, particularly after the game’s release on new consoles and PCs, non-mobile net revenue recovered impressively, increasing by 71%. This recovery was bolstered by successful titles like Civilization VI and Mafia III, both launched in October and developed by 2K, a subsidiary of Take-Two.
The analysts highlighted Take-Two’s strategic approach, noting that while Rockstar Games, a part of Take-Two, releases landmark games sporadically, the consistent output of games from 2K studios and Private Division contributes to steady top-line growth. They acknowledge that annual franchises, such as 2K sports titles, and mobile games add a degree of predictability to Take-Two’s long-term growth.