Analysts at Wedbush have reiterated their ‘Outperform’ rating on Take-Two Interactive Software Inc (NASDAQ:TTWO) after the video game maker’s first quarter earnings were largely in line with estimates and there was no change to the timing or optimism around the highly anticipated release of Grand Theft Auto 6 (GTA 6).
With the release of its fiscal first quarter 2025 earnings after the bell on Thursday, Take-Two reiterated its fiscal 2025 guidance of net bookings in the range of $5.55 billion to $5.65 billion and earnings per share (EPS) of $2.35 to $2.60 and the release window for GTA 6 in Fall 2025.
It also expects a dip in profitability next quarter due to increased marketing for its mobile games and the addition of Gearbox.
Take-Two guided net bookings in the range of $1.42 million to $1.47 million and EPS of $0.35 to $0.45, missing the Wedbush analysts’ estimates of $1.525 million and $1, respectively.
“The company continues to expect seven immersive core titles for the year, with one having already released, and only three others having been confirmed,” they wrote.
“Gearbox's bookings contribution to this fiscal year appears minimal; while TakeTwo will pay royalties previously paid to Embracer (the former Gearbox owner) to itself instead, the royalty savings are likely to be fully offset by higher personnel and occupancy costs for the studio.”
In a base case, analysts see Take-Two shares as fairly valued given the company’s solid execution.
“GTA 6 will launch eventually and probably perform very well. With that said, the potential of GTA 6 is already priced into the shares,” they wrote.
In a bear case, they see GTA 6 launching later than investors expect and failing to live up to expectations as its long-term release slate lacks visibility, but in a bull case, Take-Two is expected to grow for the foreseeable future driven by GTA 6 and an expanding frontline release slate.
They concluded: “Investor sentiment is mixed, with the vast potential of GTA 6 offset by the long wait for the game.”
The analysts see Take-Two’s shares reaching $190. They traded up 4% at about $144 on Friday morning.