On Friday, Goldman Sachs adjusted its outlook on Take-Two (NASDAQ:TTWO) Interactive (NASDAQ:TTWO), reducing the price target to $170 from $185 while sustaining a Buy rating on the shares. The firm's analyst cited Take-Two's recent fourth fiscal quarter 2024 earnings report, which surpassed expectations in several key financial metrics, including bookings, non-GAAP gross profit, and earnings per share (EPS).
The report highlighted that management has specified a narrower launch timeframe for the highly anticipated Grand Theft Auto VI (GTA VI), now expected in fall 2025, with projections of sequential bookings growth through fiscal year 2027. However, the guidance for fiscal year 2025 was below Goldman Sachs' initial forecasts, prompting a revision of their net bookings forecast to $5.6 billion, down from a previous estimate of $7.1 billion.
Goldman Sachs' continued endorsement of Take-Two's stock is rooted in the company's unique position to capitalize on key industry themes. These include visibility into the GTA VI release schedule, the potential for successful monetization of a diverse intellectual property (IP) pipeline, and the momentum in mobile gaming.
The firm also notes an open question regarding how post-restructuring operating expenses in fiscal year 2025 might influence future operating margin leverage and the conversion of bookings into normalized earnings in fiscal years 2026 and 2027.
The analyst's note reflects a belief in Take-Two's multi-year content pipeline, which is anticipated to drive bookings potential from fiscal year 2025 to fiscal year 2027. Following the earnings report and management's forward-looking statements, Goldman Sachs has updated its operating estimates and adjusted the 12-month price target for Take-Two Interactive .
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