Take-Two Interactive (TTWO) beat consensus. BMO analyst Edward Williams attributes the upside to strong sales from Grand Theft Auto IV and Top Spin 3, and expects this trend to continue:
The company performed significantly ahead of expectations owing primarily to the strength of GTA IV, Carnival Games, and Top Spin. Over 10 million copies of GTA IV have sold through thus far. The game should enjoy continued demand at retail through the holidays, as the hardware installed base grows.
Williams praises TTWO for the underlying quality of its products and the strength of its balance sheet. However, despite the strong quarter, Williams’ view remains unchanged in light of continued volatility resulting from takeover speculation:
In our opinion, Take-Two has a strong collection of studios; a good portfolio of owned intellectual property; and an improving balance sheet. As has been the case for several years now – the GTA franchise continues to experience unprecedented success. However, the company is also subject to ongoing takeover speculation which, we believe, has had a significant impact on the company’s shareholder base. In particular, we believe that many of TTWO shareholders are short term in nature. In our view, when we take into consideration the shareholder base and that the video game industry is inherently volatile – we would not be surprised to see the stock remain volatile as market speculation swirls around regarding a potential M&A transaction.
Williams reiterates his Market Perform rating and maintains his $26 price target.
Business Insider Emails & Alerts
Site highlights each day to your inbox.