THQ yesterday posted better-than-anticipated sales figures, but with it came two notable caveats: the cancellation of the Xbox 360's Sopranos game and increased company losses of more than $8 million from the same time last year. Would it spell doom in the eyes of Wall Street and industry analysts? As it turns out, no.
Three analyst groups today echoed one another's calls to buy stock in the company, eyeing the success of THQ's Cars games and the upcoming Saints Row. Despite THQ's losses during its first quarter, the analysts said, the game publisher's results were still better than what the firms had expected.
Thanks to sales of Cars and the anticipated success of Saints Row, "THQ remains our top-pick in the near-term," said UBS analyst Mike Wallace. THQ's key games this holiday season will likely bolster the company as the industry makes the transition to two new next-generation consoles, the Sony PlayStation 3 and Nintendo Wii, he said.
"Four kids titles (SpongeBob, Avatar, Barnyard, Cars) will ship in Q3 for the Wii, which should outsell the PS3 in Q3 due to more units available at launch," he said in a statement.
The positive news from yesterday's earnings call and THQ's upcoming second-quarter lineup of games encouraged Lazard Capital Markets to increase its revenue predictions for THQ.
"We believe THQ has a very solid release schedule planned ahead of the
holidays, including key titles Saints Row, Company of Heroes, WWE
Smackdown vs. Raw, and several Nickelodeon licenses," said Colin Sebastian, an analyst at Lazard Capital.
"THQ reported Q1 results that were substantially better than our and the consensus expectations" said firm Wedbush Morgan. The company tweaked its THQ forecasts "with slight adjustments to account for the upside generated in Q1," projecting a $31 stock price over the next year.
One of the few naysayers was Janco Partners, which downgraded THQ's stock to a "sell" status.
Like most of the analysts, investors are smiling upon THQ today. After-hours trading yesterday increased THQ's stock price to $22.60--a jump of 2.17 percent from Thursday's market-closing $22.12--and analysts' praise of the company must be spreading: THQ's stock hiked more than 4 percent today, to $23.01, as of press time.
