(RTTNews) - FBR Capital Markets has maintained its "Outperform" rating on video game publisher Take-Two Interactive Software, Inc. (TTWO:
News ), citing the company's relatively strong release schedule in the first half of next year and the likely announcement of Grand Theft Auto for a 2011 release, in addition to a more cooperative macro environment. Based on the latest retail release schedule and strength of the company's recent releases, the brokerage adjusted its earnings estimates for 2009 and 2010. The price target remains unchanged.
Analyst Heath Terry believes that with lower hardware prices and the strongest release schedule in memory, the video game industry will grow about 15% in 2010, following the 5%-10% decline of 2009, and that Take-Two is well positioned to benefit from the industry's return to growth. ''While the company still needs to expand the portfolio, rationalize its cost structure, and deliver product on time—all difficult challenges—we believe the risk/reward in owning TTWO lies in investors' favor,'' FBR added.
According to the brokerage, Take-Two's model of focusing on the core gamer niche with a handful of high-quality franchises will be successful. FBR expects the company to selectively pursue opportunities in mobile, online, and casual games without over-committing.
FBR revised up its 2009 earnings estimate for the video game publisher to a loss of 81 cents a share from a loss of 84 cents a share and the revenue estimate has been increased to $1.032 billion from $1.001 billion. The brokerage now sees 2010 earnings of $0.36, compared to its previous projection of $0.86, and revenues of $1.258 billion, in comparison with $1.305 billion forecast earlier, due primarily to moving the next Grand Theft Auto from the end of 2010 to F1H11.
TTWO closed Wednesday's regular trade at $11.68, up from the previous close of $11.57, on 1.65 million shares.
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by RTT Staff Writer
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