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Take-Two (TTWO) Earnings Preview

by | May 16, 2021

Take-Two (TTWO) reporting earnings on Tuesday after the Close with the Street looking for $0.68 on $666.1M in sales. Next quarter is guided to $0.88 and $592.31M while the FY is $6.13 and $3.43B, a 15% increase Y/Y. Shares have closed higher in five of the last eight with an average closing move of 5.88% and a max move of 11.85%. The current implied move is 5.5%. Shares have pulled back to support at $160 and key area to watch is back above $185 which can set up a run to $200+. A move under $155 has some room to fall back to $135. The $19B game developer trades 27.5X earnings, 5.8X sales, and 7.8X cash. TTWO has dominant franchises like GTA and NBA 2K1 that are continuing to thrive and grow not just bookings but also recurrent consumer spending within the games and downloadable content. They expect to have another record year for GTA Online and expanding their online play for other titles like Red Dead Redemption which should boost digital spend. The biggest question-mark now for TTWO becomes the longer-term pipeline including a GTA sequel.  Analysts have an average target for shares of $200 with a Street High $240. MKM lowering estimates on 4/28 noting that the company is likely to outperform consensus expectations for Q4 and its stock is likely near the bottom, but future upside is a big question mark given the lack of visibility into the release pipeline. Jefferies noting in April that FY21 comps are very difficult and the pandemic has also slowed down or pushed back their release timeline, a double hit for the company. Short interest is 2.75%. Hedge fund ownership fell 0.5% in Q4. Polar Capital, Holocene, Carillon Tower, and Alta Capital all buyers of stock.

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