Analysts react to Take-Two results

Industry watchers slash earnings-per-share expectations; stock surges 11 percent anyway.

So what is an investor to make of yesterday's Take-Two Interactive (ticker: TTWO) quarterly report, in which the company's revenues and losses both exceed expectations? According to a number of analysts today, not a great deal.

In notes to investors, Friedman Billings Ramsey's Shawn Milne, PiperJaffray's Anthony Gikas, Wedbush Morgan Securities' Michael Pachter, and UBS Investment Research's Michael Wallace all slashed their earnings-per-share (EPS) estimates on the stock. Milne was the most generous with the EPS adjustment, knocking his assessment of the stock's EPS for FY2006 from $.50 down to $.20. At the other end of the spectrum, Wallace scrapped his $.55 projected EPS and now expects a $.19 loss per share for the year.

While Milne and Gikas stood by their 12-month price targets on the stock, Wallace and Pachter had second thoughts about their previously stated targets. Pachter's pessimism was especially pronounced, as he lowered his target to $12, more than $4 lower than the lowest of the other three analysts' expectations.

"We are not optimistic about the prospects for Table Tennis (though we are reminded of our skepticism about THQ's Destroy All Humans), and we expect Bully to be a mediocre title at best," Pachter wrote. "Notwithstanding the company's continuing optimism about its effort to diversify into sports, we think that the experiment is not working."

It wasn't all gloomy for Pachter. He did note that Grand Theft Auto was still chugging along. He estimated that the franchise would account for 25 percent of the company's publishing revenues for the year and noted that "the company controls its own destiny, and is a key announcement away [the next installment of GTA?] from providing a catalyst for rapid share appreciation."

Pachter's fellow analysts were more upbeat. Gikas actually described Take-Twos results as "a slight positive overall." In his own note to investors, Wallace said the company's near-term woes are just another part of the transition between console generations.

"We still expect the next few quarters to be tough for TTWO and the rest of the industry due to transition-related issues, so there is nothing to get excited about near-term. Next year, we do expect TTWO to grow along with other companies in the space, as industry growth accelerates," Wallace wrote.

Interestingly enough, the market reaction to the stock has been quite positive today. After closing at $14.85 before revealing its quarterly results yesterday, Take-Two stock opened the day up slightly and gained more than 11 percent on the day, finishing up $1.66 to $16.51.

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Discussion

30 comments
mattrix33
mattrix33

Analyists have to go for the "shock" value...if they said "everythings going to be fine" no-one would take a blind bit of notice of them.take the PS3 price scares they keep putting out...they don`t know real facts so they make them up...i have never seen them get a single thing right.

bonso
bonso

i would rather play another GTA than its knock offs. Analysts just dont get it, sometimes. hey, who would have thought Bulletproof would sell over a million copies?

frankeyser
frankeyser

i am just tired of gta... the formula is getting old. and the stories are getting lazier and lazier.... what are they goign to rip off for the next story... the wizard of oz...

frankeyser
frankeyser

i am just tired of gta... the formula is getting old. and the stories are getting lazier and lazier.... what are they goign to rip off for the next story... the wizard of oz...

ufopuller
ufopuller

That company should share the money with me

ruttness
ruttness

oklahoma is a fun place to be

onigedaki
onigedaki

Jim Kramer of "Mad Money" is saying to get rid of TTWO now because he see's this company doing the same thing's Enron did before they went under. And as far as I know the caped crusader of Wall-Street know's what the hell he's talking about.

lageasy311
lageasy311

Then don't read it fellas....simple as that if you are tired of analysts.

Ahiru-San
Ahiru-San

hopefully they will never make another gta game ^_^

cal_hooper
cal_hooper

Analysts or not, there might be some truth in this... Not that I care, KEEP IT UP, MORE GTA, SCREW THEM POLITICIANS!

loic54
loic54

i don't get it!! Hot coffee!! Hot!!

NeoJedi
NeoJedi

Analysts are often known to be wrong... so let's just wait and see what happens with Take-Two.

TequilaMike
TequilaMike

Analysts should start playing video games before giving us their opinions!

Mafia217
Mafia217

analysts....pfftt.....who believes on them... (-_-)

thefjk
thefjk

What will all this money talk! I dont want Take 2 to get in any cash problems man!

CaptainCrazy
CaptainCrazy

Why do you guys bash the analyst reports? The fact that ther is more attention focusing on videogame company stocks shows that this industry is growing. You always have the option not to click on the news you don't want to read.

davahsa
davahsa

if you don't care...why read the artical? GTA on 360 BABY!

trogdorchief01
trogdorchief01

I am sick of it too, analysts can get really annoying. I DON'T care about what they have to say.

benifit0fadoubt
benifit0fadoubt

If history has proven anyting it's that rockstar seems to give us about 3 mediocre games between every thrilling GTA. This history lesson seems to beg the question, wouldnt they make more money if they put more people on the GTA team?

woohooforme
woohooforme

I don't know about you, but having three news stories a day about how Analysts predict or react is getting kind of boring.

Oni
Oni

They got Burned by Hot Coffee.

Donkeljohn
Donkeljohn

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

Donkeljohn
Donkeljohn

GTA = 25% of revenues . . . amazing. Also amazing is the surge in stock price.

faxekondi3
faxekondi3

If you want a great game then buy Grandia3.

soulkeeper90
soulkeeper90

[This message was deleted at the request of a moderator or administrator]

Briantb_2008
Briantb_2008

You can never believe the stock investors till all the cards are on the table there are just to many factors. Its really hard to predict video game stocks because you never know what will happen till the games the company makes come out. We the gamers decided the stocks of a company not some pencil pusher in a office.