Text size
Shares of
Take-Two Interactive Software
had their best day since 2017 after the company reported fiscal fourth-quarter earnings results. Wall Street was more excited about the quarters ahead for the maker of Grand Theft Auto and Bioshock.
Take-Two (ticker: TTWO) reported better-than-expected results but missed Wall Street’s forecasts for bookings, which is a form of adjusted revenue.
Take-Two stock rose 11.8% to close at $123.08. It was the stock’s largest one-day percentage gain since Aug. 3, 2017, when it rose 12.2%, according to Dow Jones Market Data. The
Dow Jones Industrial Average
was up 1.3% and the
Nasdaq
was up 2.7%.
Wedbush analyst Michael Pachter wrote in a note Tuesday that the in-line quarter should precede a transformative fiscal 2023. The company expects to close its merger with mobile game publisher
Zynga
(ZNGA) on Monday. It also plans to release 69 games by March 31, 2025, Pachter notes.
“We foresee no regulatory obstacles to the combination of Take-Two and
Zynga
,
which has the potential to create a gaming powerhouse with significant scale in the console, PC, and mobile marketplaces,” he wrote.
He said once the deal closes, he’ll update his estimates and review his $145 price target, “with a distinct bias that TTWO shares have room for greater upside.”
Credit Suisse analyst Stephen Ju, who has a Neutral rating, cut his price target to $182 from $190 in a note on Tuesday. Ju wrote that the results fell short of his estimates, but he believes a key focus for investors will be the revenue synergies it can realize after it closes its Zynga deal.
“We continue to believe that the primary value unlock scenario will be for Take-Two to transition existing Rockstar/2K IP to mobile in a more meaningful way,” Ju wrote, referring to its trove of major console and PC franchises like Grand Theft Auto and BioShock.
MKM Partners analyst Eric Handler wrote in a note Tuesday that the results were good enough to prompt a relief rally. Take-Two stock is still down about 30% so far this year.
“We believe investors were bracing for more ominous forward expectations,” Handler wrote. “Next quarter’s earnings report (1QFY23) should prove more important as that is when management will provide its initial outlook incorporating the Zynga acquisition, which is closing next week.”
Write to Connor Smith at connor.smith@barrons.com
Read More: Take-Two Stock Had Its Best Day Since 2017. Here’s Why.