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Take-Two Outlook Poised for Upside as GTA VI Approaches, UBS Says

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Take-Two Outlook Poised for Upside as GTA VI Approaches, UBS Says

Take-Two Interactive Software's (TTWO) unchanged full-year guidance could prove to be conservative following its upbeat remarks about the upcoming "Grand Theft Auto VI" video game, UBS Securities said in a note e-mailed Monday.

On Friday, the video game publisher's fiscal first-quarter results surpassed Wall Street's expectations. The company reaffirmed its fiscal 2027 outlook, including its net bookings range of $8 billion to $8.2 billion.

The Rockstar Games unit is seeing an "unprecedented and astonishing" level of pre-orders for the highly anticipated GTA VI title, Take-Two Chief Extractive Strauss Zelnick said on an earnings conference call, according to a FactSet transcript.

Despite the upbeat comments about the game, the company reiterated its annual guidance, UBS said in a note to clients.

"We continue to believe guidance will prove conservative and expect more significant updates closer to GTA VI launch," UBS analysts Christopher Schoell and John Hodulik wrote. "This was the case for both GTA V and (Red Dead Redemption 2), when the company outperformed its initial bookings outlook by several hundred million."

GTA VI is scheduled to be released Nov. 19. The game will be available on Sony's (SONY) PlayStation and Microsoft's (MSFT) Xbox platforms.

UBS sees "significant" pent up demand for the title and continues to believe the game will be even bigger than GTA V given factors such as the social effects in gaming nowadays.

The brokerage continues to expect that GTA VI will sell 35 million units in fiscal 2027 and 60 million units in the first two years. "Along with our estimated $84 (average selling price), we look for ($2.1 billion) of full game sales this year and ($1 billion in 2028)," the analysts said.

UBS has a buy rating and a $300 price target on the Take-Two stock. The company's shares were up 2% in Monday late-afternoon trade.

"We are bullish as we expect new GTA VI announcements, trailers and gameplay to drive sentiment and confidence in the profit/(free cash flow) ramp," the UBS analysts said. "The consolidated nature of the industry is also supportive of valuation with (Take-Two) being the remaining publicly traded US AAA developer."

Price: $251.68, Change: $+5.18, Percent Change: +2.10%

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