Financial Trading Blog

Stock of the day 07/08/2015 – Take-Two Interactive Software Inc



It might have got off to a rocky start, but Take-Two Interactive levelled up after its fourth quarter earnings in May.


The company announces its Q1 2016 earnings release on Monday.

Up until the end of January things had been looking good for Take Two; after opening the year at $27.96 the stock had climbed to an all-time high of $30.80 by the end of the month. However February brought with it the company’s third quarter results and a subsequent 3 month decline. Whilst adjusted earnings per share were at $1.81 against the $1.52 expected alongside a 24% increase in non-GAAP revenue year-on-year to $954 million, largely prompted by sales of GTA V and NBA 2K15, these figures couldn’t stop a mass exodus from the stock.

Take Two Interactive Software Inc Chart August 2015
(Source: IT-Finance.com 07/08/2015)

This long-term sell-off dragged Take Two all the way down to $24.90 by the time of its fourth quarter results in the middle of May. However, those results, which saw its adjusted quarterly revenue jump 83% to $427.7 million (but actually miss the $458.9 million expected) alongside a 153% increase in adjusted net income to $53.4 million. This ignited investors’ appetite for the stock in a way that its third quarter report surprisingly couldn’t back in May, causing an 18.3% leap in its price back to $28.63.

By July Take-Two was back in all-time high territory, and a surge in the middle of July helped lift it, by the end of the month, to a fresh closing peak of $31.58. It wobbled away from this price as we entered August, but strong results from Activision Blizzard on Tuesday helped push Take-Two to a current trading price of $31.55 (IT-Finance.com, 07/08/2015).

The most recent quarter has been quiet in terms of releases, as the spring and summer months normally are, meaning Take-Two will likely be reliant on the continued sales of the Borderlands franchise, GTA V (especially interesting will be its PC and DLC sales) and NBA 2K15. It is forecast to post a 132% jump in revenue to $351.1 million alongside earnings per share of $0.36 from a loss of $0.14 the year before.

Take-Two Interactive has a consensus rating of ‘Buy’ with an average target price of $32.72.


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