😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

"GTA VI" release should fuel "substantial" jump in Take-Two bookings - JPMorgan

Published 06/06/2024, 08:07 AM
© Reuters

Investing.com -- The hotly-anticipated release of the latest installment of Take-Two (NASDAQ:TTWO) Interactive's mega-popular "Grand Theft Auto" franchise should fuel a "substantial" uptick in bookings and profitability at the videogame maker, according to analysts at JPMorgan.

In May, Take-Two set the release date for the title -- "GTA VI" -- in the fall of next year. The game is widely tipped to be an instant hit with gamers, with analysts predicting that it could fuel billions of dollars in annual sales.

However, the timing of the game's release led Take-Two to scale back its financial expectations for its 2025 fiscal year. The company now anticipates that bookings during the period will be between $5.55 billion to $5.65 billion, down from its prior outlook of a little over $7 billion.

Meanwhile, Take-Two has laid off 5% of its workforce in a bid to rein in costs in response to broader industry-wide concerns over a slowdown in spending by inflation-squeezed customers.

In a note to clients on Thursday, the analysts at JPMorgan added that the gaming sector is becoming increasingly focused on maximizing the success of titles that are already proven winners. "Consumer engagement and publisher resources" have consolidated around the largest gaming franchises, they said.

"We believe these trends favor scaled players in the industry, with the biggest hits likely to get bigger and the mid-tier titles likely to get squeezed as the cost to compete increases," the analysts argued.

For that reason, investor expectations for "GTA VI" are high, the JPMorgan analysts said. Given the success of prior releases like "GTA V" and "Red Dead Redemption 2", they anticipate the game will drive a sharp "step-function increase in bookings and profitability" at Take-Two and possibly act as a "catalyst to valuation."

The analysts reiterated their "Overweight" rating of Take-Two and lifted their December 2024 price target to $200 from $180.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.