Take-Two Interactive Software, Inc. (NASDAQ:TTWO) shares have taken off, adding 16% to trade at $27.95, after the company reported better-than-expected earnings for the fiscal fourth quarter. However, the company also issued guidance for its new fiscal year that missed expectations, pushing Brean Capital analyst Todd Mitchell to reduce the price target to $32 (from $35), while maintaining a Buy rating on the stock.
Mitchell wrote, “We have lowered our F2016 estimates to $1.49 billion and $1.20 from $1.68 billion and $1.40, but are staying above guidance as we believe they are based on the same conservative approach that led to last year’s easily beatable forecast. Specifically, we see upside driven by continued sell-through for GTA, as well as doubledigit growth for GTA Online digital revenue. Take-Two’s annual sports franchises, NBA2K and WWE, are also likely to grow modestly in their next iteration, while management alluded to another AAA title release from 2K. Moreover, we find it likely that Rockstar will announce a new release of their own for F2H15, which would indicate potential upside from last year’s results. We are trimming our target price to $32 from $35 to reflect the reduction in our F2016 estimates, but reiterate our Buy rating.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Todd Mitchell has a total average return of 14.9% and a 70.1% success rate. Mitchell has a -11.9% average return when recommending TTWO, and is ranked #49 out of 3606 analysts.