Opinions
Matthew McCall
Take-Two Interactive Softwar
TTWO-Q
BUY
Jun 05, 2017
$77.320
Stock price when the opinion was issued
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COMMENT
Down 16.5% year-to-date. TTWO almost always reports a great quarter and conservative guidance. But when they did that in February, the stock plunged from $213 to $161 in one month. Since then, shares have struggled despite their booming business and a fine slate of new releases. Covid winners are unfairly pigeonholed as reopening losers. This includes fellow videogame stocks, EA and ATVI, unless they can prove that more people got hooked on their games this quarter.
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COMMENT
His favourite videogame stock for ages. It reported good numbers--top and bottom decent beats--but cautious guidance on Monday; a couple of major releases are delayed. The stock got crushed this week, from $173 to $157 today. This has bottomed before, so it may come back again.
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BUY
Allan Tong’s Discover Picks Speaking of Take Two, its shares dipped 8.7% a week after issuing its report earlier this month. TTWO is expanding its mobile catalogue after recently buying Socialpoint, Playdots and Nordeus. Its WWE SuperCard is its current top mobile game at over 24 million downloads. TTWO beat earnings, but didn’t change its outlook when the street was expecting an upgrade. Hence, the sell-off. However, TTWO’s PE stands at 28.6x while EA’s is precisely twice as much. Then again, Take Two pays no dividend and the company is losing market share. Despite the drop in share price, the street hasn’t changed its 16 buys since that quarterly report (plus five holds and one sell signal). The price target is $213.57 or 33% upside. Read 3 Growing Tech Stocks for our full analysis.
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BUY
Allan Tong’s Discover Picks TTWO shares have risen above their 50- and 200-day moving averages. Momentum is strong. Shares soared last fall before turning bumpy this winter until the Microsoft news. TTWO has beaten its last four quarters. Its most recent EPS of $4.84 is up 17.06% in the past year. Gross and profit margins (66.04% and 16.72%) score higher than the industry norm, though ROE of 17.69% is lower than average in the recreational products space. Altogether, the street sees more than 15% upside to $201.93, based on 11 buys and three holds. Game on. Read 3 Promising Reopening Stocks 2022 for our full analysis.
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The video game phenomenon is getting another boost. We are at the beginning of the next phase. He likes it.