Analysts 'optimistic' on THQ rebound

Janco Partners' Mike Hickey and EEDAR's Jesse Divnich believe UFC, Red Faction publisher will reverse fortunes this year; stock price hits eight-month high.

Gaming executives are among the first to be upbeat about their company's future prospects, even if those rosy projections are made from within a house that is clearly on fire. Such was the case with THQ president and CEO Brian Farrell, who last month had the dubious honors of putting a positive spin on the publisher's dismal fiscal 2008 performance in which the company lost $431 million and eliminated some 24 percent of its global workforce.

THQ may have struck gold with Red Faction.

"We have taken decisive actions to achieve our cost saving objectives, eliminating $220 million in cash expenditures while at the same time implementing a focused product strategy," Farrell said. "We are investing in the brands and products with the highest potential to drive THQ's long-term profitable growth." That strategy entails realigning THQ's product portfolio under the precepts of quality over quantity, as well as halving its yearly core game slate.

Now, analysts seem to be brightening on THQ's potential of recovering from the setbacks it experienced in 2008. In a note to investors today, Janco Partners' Mike Hickey upgraded THQ's stock to "Buy," saying that while profitability remains uncertain, the publisher is poised to build revenues in the coming fiscal year.

"We are increasingly more optimistic on the company's near term financial prospects as our focus shifts from near term liquidity concerns to their upcoming game pipeline where buzz is beginning to build," Hickey said. "Management continues to rebuild credibility through execution on planned cost cutting, increased financial transparency, and recent/upcoming product releases including UFC 2009 Undisputed that meaningfully exceeded our initial expectations."

"The Company's games showed reasonably well at E3 and management's analyst presentation drew positive interest from the investment community (27 percent share price increase post meeting)," he continued. "In consideration of their near term sales success, massive cost cutting, strong product showings, and new credit line, we are less concerned on their near-term cash balance and believe there is likely upside to their original fiscal '10 sales guidance."

Electronic Entertainment Design and Research's Jesse Divnich was equally upbeat on THQ's future prospects. As part of his monthly retail sales preview issued today, Divnich lauded the release of UFC 2009 Undisputed and Red Faction: Guerrilla, pegging each title to sell a respective 2 million and 1.5 million units by the end of the publisher's fiscal year, which concludes March 31, 2010.

"Most analysts have agreed that THQ would need two successful hits in 2009 to remain profitable, and it looks as if this has been achieved with UFC and Red Faction," Divnich noted.

As of market close on Tuesday, THQ was trading up $0.28 to $8.93 per share, a 3.3 percent climb over yesterday. The closing price marked the highest THQ's stock has been valued at since October 2008.

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Discussion

46 comments
aura_enchanted
aura_enchanted

give us a DoW2 expansion and id gladly give you moneyz thq. in fact while your at it give us a PC port of ufc ill pay money for that too.. alot of money *taps conveniently placed suitcase*

aura_enchanted
aura_enchanted

[This message was deleted at the request of the original poster]

Hedfix
Hedfix

Want to help your finances more? Remake WWF: No Mercy for XBLA.

pakhair
pakhair

THQ make good games........... We don't want to loose u as Midway & Eidos.......... Thankfully Square Enix bought Eidos.........

pakhair
pakhair

Red Faction looks great & UFC is also one good title.......... Hope THQ grabs some money this year............ I m lookin forward to Saint's Row & WWE (New Titles), I hope they also make them on high standards................

thenephariouson
thenephariouson

Well i think RF:G is exellent fun, and although UFC isnt my type of game, i do acknowledge the fact that its technically a very good game. I really wish THQ the best of luck.

Sechu
Sechu

I guess both UFC and RF:G are great games and may help THQ to achieve the sales target by net March.

jackcranberry
jackcranberry

You know, RF:G surprised the hell out of me; not really all that enthralled with the UFC game, but my friends seem to really like it. All I know is that I'm digging RF:G, even if the multiplayer is still a little wonky (and I mean only a little; I've only seen lag in 2 or 3 out of 50 matches)

Timbydude
Timbydude

I really like the fact that THQ is visibly shifting from sub-par licensed titles (games based on Nickelodeon shows and such) into actual quality mainstream games.

akiwak
akiwak

I've played and enjoyed both games, I'm currently enjoying UFC 2009. I'm a huge fan and that games is a good first attempt at bringing that entertainment home. Currently undefeated with my characters.

BtmnHatesRbn
BtmnHatesRbn

THQ (Toy Headquarters) is the modern-day Acclaim. You know, the former Masters of the Game.

CVM_123
CVM_123

both games arent worth the 60$ price tag

shadowysea07
shadowysea07

i'm glad they realized that quality games sell more than crappy ones. if they stay away from the crappy games and develope some good games they can't go wrong.

bleedgreen2-1-5
bleedgreen2-1-5

o nevermind, its because thats the canadian cover with st. piere.

bleedgreen2-1-5
bleedgreen2-1-5

yo why dosent gamespots pic have forrest griffin on the front of the game? mines does, yo man i want ufc 2010 and smackdown 2010! so walk it off fellas!

DrunkenGoon
DrunkenGoon

THQ has always been one of my favorite developers.. They simply make some great games.. I'm clocking in a lot of hours playing UFC 2009 so I hope they stick around long enough to make the inevitable sequel..

airsoftmanic
airsoftmanic

please THQ, stay alive until you release space marine. then you'll see a fair bit of profit.

BlackBaldwin
BlackBaldwin

@player leo: hate to break it to you bud but Red Faction 2 was a horrible game compared to the first game that they made. Also this latest game is a improvement over the second yes but I see that they still missed the mark completely where the story was concerned it through. Anyways I hope THQ pulls out of its slump through and continues on forward and upward they are a good company and I hate to see them go.

DoomZaW
DoomZaW

Its hard to imagine THQ should be in financial trouble, they've published a whole lot of blockbusters this gen, RFG, Company of Heroes, DOW2 and Saints Row 2

player_leo
player_leo

UFC and Red Faction are some real great games. UFS is more technical than any other fighting game, be it Street Fighter, DOA, or Tekken. Red Faction is a great franchise. If you've never heard of it before this that only shows that you've just recently got into gaming. Red Faction 1 & 2 are classics on the PS2 and that should be in the library of anybody that claims they like FPS.

shani_boy101
shani_boy101

the last my family got (i didn't) from THQ was some ***tty Barbie PC game from 2000 for my sister. I'm not interested in Red Faction (only just heard of it, lol), but i'm guessin its the best game they've ever released,

Silver_bLooD
Silver_bLooD

I must say I never heard of Red Faction until I bought it, I was quite impressed with the game, and renewed my faith in THQ.

kresimirzvonko
kresimirzvonko

It will be awesome to make Tita Queast 2 before Diablo 3 came out.Guarantee profit

marcopolo426
marcopolo426

As long as THQ develop original ideas like Red Faction, Darksiders etc. they can't go wrong. I hope THQ would lay off cheap movie games in the future.

neutralbias
neutralbias

Red Faction is the first THQ game I've seen on a t.v. commercial. I watched a review on G4 and said no way, but the commercial made me say YES!!! Looks great!

combatsoldier
combatsoldier

THQ is and always will be my favorite game developer. Every game they have ever made I have liked. They just make good games in my opinion.

Pete5506
Pete5506

I hope this si just a start for them to get better

d12malu
d12malu

dang, i knew I should of bought it a couple weeks ago, could of made a nice profit. Still a good buy at its price now though. Year and a half ago it was worth close to $30 a share. THQ will come back.

firehawk998
firehawk998

Well this year THQ has already released 2 fantastic games Red Faction and UFC 2009 the other release I am looking forward too is Darksiders hope it too does and turn the fortunes for this comapny. Here the fundamentals are the same release good videogames and get better returns.

polsci1503
polsci1503

THQ has done good by getting their two hits right out of the gate for the fiscal year, and they may hit again with Darksiders.

ropumar
ropumar

I knew, called last year they would do great now. Warhammer dawn of war was a hit also.

darkfightersoul
darkfightersoul

THQ was doing poorly? I thought they were fine. Especially in comparison to other companies having a really hard time.(I.E. Midway and Atari)

shawn7324
shawn7324

I don't think either game is worthy of full retail price. I will rent UFC sometime later down the road & I have already picked up Red Faction Guerrilla used for $35.

firedrakes
firedrakes

good for them and no on titan not owned by thq

DangerClown
DangerClown

If they would come out with a decent Eastern Front addon for CoH, a rebound would be a for sure.

meowth9
meowth9

Bottom line, they made some good games! And now they're doing better. Red Faction is hella fun.

spartan9193
spartan9193

...it's the flip side for me. I really enjoyed THQ's Dawn of War and Company of Heroes. The games are entertaining, there is plenty of carnage, graphics are good and it networks well with friends around the country. On a side note, I can't speak for DoW2...I haven't tried it yet.

popplayer22
popplayer22

I haven't ever played a decent THQ game. I'm being dead serious. I avoid all games with that stamp on the box. It pretty much spells doom for the game.

assassinatur54
assassinatur54

I like Red Faction a lot, it's just very addicting. I want to see another MX VS. ATV series come out though. I loved those games.

PapaZUmbi
PapaZUmbi

Good things happen went you do the right moves...........in 6 months they would have another good game "darksiders"...that game looks good.

console-deity
console-deity

I'm all for THQ doing better, I really like a lot of their IPs.