Take-Two Interactive Software (NASDAQ: TTWO) is not out of the weeds, but its outlook has grabbed the attention of analysts, who are now driving the consensus estimate to new highs. Takeaways from the FQ1 2025 include mixed results with widening losses offset by a slate of recent releases and the company's most ambitious pipeline in history. The pipeline includes eight major releases and updates, including new versions of flagship games and expanded access to existing ones. At least five games are on track for release by the end of this fiscal year, and the others will likely be released late in the year or early 2026.
The analysts' response is overwhelmingly bullish and focused on the pipeline. MarketBeat.com is tracking over a half-dozen updates, including an upgrade to Buy from Hold and numerous price target revisions, but none were lowered. The takeaway is that sentiment for this Moderate Buy-rated stock is firming and on the verge of a Strong Buy with a price target that implies a deep value for investors.
The lowest analyst price target on record is $151, about 4% higher than the latest closing price, with a chance for a 25% upside at the consensus. Most fresh targets are above consensus, and the $200 high target aligns with the all-time highs. Assuming the company continues to gain traction with the pipeline, the trend in analysts' sentiment should lead to a fresh all-time high by the end of the fiscal year.
Take-Two Interactive Rises on Mixed Results: Losses Widen
Take-Two Interactive did not have a great quarter in Q1 but did turn a corner, and the outlook is brightening. The $1.34 billion in revenue is up 4% compared to last year, outperforming the consensus estimate by more than 700 basis points as it returns to growth sooner than expected. The strength was driven by an 11% increase in gaming revenue, offset by a 35% decline in ad revenue. Gaming revenue is attributed to strength in the NBA2K franchise, Grand Theft Auto, Toonblast, and the hyper-casual portfolio, including Words with Friends and other non-aggressive games. Bookings, an indication of future revenue, are up 1% across the network but flat on a comp-player basis.
The bad news is that the company’s losses widened. The primary culprits are increased selling and marketing costs, general and administrative, depreciation, and taxes. The critical detail is that GAAP losses increased by 27%, leaving the EPS at—$1.52 or $0.15 worse than expected and 25% worse than last year. Guidance is an offsetting factor, but it is not robust. The company reaffirmed its guidance for the year, including low-single-digit net bookings growth this year and next and for losses to persist.
Evidence of Take-Two Interactive’s Turn-Around Is in the Balance Sheet
Take-Two Interactive is making headway on its turnaround, and the balance sheet and cash flow details evidence this. The company produced a cash-flow positive quarter despite the GAAP losses, allowing it to maintain its low-leverage position at 3x cash and 0.5x equity while building shareholder value. Equity is up 4% and is expected to grow as the year progresses.
The price action in TTWO surged more than 4% following the release, confirming support at a critical level. That level coincides with the 2024 lows and may lead to a Strong Buy signal on the weekly chart. As it is, the market is moving higher and on track to reach the $150 level soon. That level is coincident with a cluster of moving averages (and the low end of the analysts' target range) that may provide resistance to higher share prices. If this market can’t get above that level, it may remain range-bound below $150 until later in the year. However, a move above $150 would be bullish and open the door to the $200 region for this technology stock.
