Analysts reset price target on Grand Theft Auto maker’s stock

“This thing of ours….it’s a brotherhood…”

And so begins the trailer for Mafia: The Old Country, the latest entry in the action-adventure video game franchise due out next year, according to Hanger 13 and 2K, a publishing label of Take-Two Interactive. (TTWO) .

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“Discover the origins of organized crime with a mafia-filled story set in the brutal underworld of 1900s Sicily,” Take-Two said in a press release. “Fight to survive in this dangerous and unforgiving era, with action brought to life by the authentic realism and rich storytelling that the critically acclaimed. Mafia the series is known for.”

Launched in 2002, the Mafia franchise has sold more than 34 million copies on consoles and PC, the company said.

Take-Two Interactive has announced its new entry at Gamescom, which is considered the world’s largest gaming event and takes place annually in Cologne, Germany.

The company, which publishes classic games such as Grand Theft Auto and Red Dead Redemption, also said that Borderlands 4, the latest in the looter-shooter franchise, will launch in 2025, where “players will once again assume the role of a legendary Vault Hunter as he searches for secret alien treasures while throwing everything in sight.”

Take-Two Interactive said the Borderlands franchise has sold more than 87 million copies to date.

The first trailer for “Grand Theft Auto VI” was officially released ahead of schedule on December 4, 2023 due to a leak.

CHRIS DELMAS/Getty Images

Take-Two’s CEO isn’t “particularly worried” about the recession

Gaming is the dominant entertainment sector, with US consumers spending $57.2 billion on games by 2023, up $1 billion from the previous year.

In comparison, global box office revenues totaled $33.9 billion last year, up 30.5 percent from 2022, thanks in large part to blockbusters like Barbie and Oppenheimer.

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“These numbers reinforce the video game industry’s position as a growth engine for the United States economy,” Stanley Pierre-Louis, CEO of the Entertainment Software Association, said in a statement.

“Combined with the fact that nearly two-thirds of Americans play video games regularly, spanning all demographics and backgrounds, these results confirm the impact of the video game industry as an economic and creative powerhouse with far-reaching cultural influence,” he added.

There are approximately 3 billion gamers worldwide, many of whom play video games from Take-Two Interactive.

Earlier this month, the company reported adjusted first-quarter earnings of 5 cents per share on net bookings of $1.22 billion, compared with adjusted earnings of 27 cents per share on net bookings of $1.2 billion in a year ago

Analysts polled by FactSet had expected Take-Two to earn 2 cents a share on adjusted sales of $1.26 billion.

Chairman and CEO Strauss Zelnick told analysts that “fiscal 2025 is off to a solid start” as first-quarter net bookings were in line with expectations “and our management team remains very confident in our path forward.”

“The Grand Theft Auto series has exceeded our expectations as momentum continues to build ahead of the release of Grand Theft Auto VI in the fall of 2025,” he said during the company’s earnings call. “Unit sales for Grand Theft Auto V continue to grow, with the title selling over 200 million units to date.”

In addition, Zelnick said that Red Dead Redemption 2 has sold more than 65 million units to date, and NBA 2K24 has delivered a solid quarter, selling nearly 11 million units to date.

During the question-and-answer period, Zelnick told analysts he’s not particularly worried about a possible recession.

Take-Two Interactive analyst cites ‘significant announcements’

“I can’t see now,” he said. “Also, I’m not in the business of predicting things like that, but the metrics don’t support it. Generally, the entertainment business is pretty resilient in a situation like that.”

“Of course, the business is not countercyclical, and in a massive downturn, we would of course be adversely affected, but I just don’t see that on the horizon,” Zelnick added.

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At last check, Take-Two Interactive shares were up 3.1% at $159.60. The stock is down just under 1% year to date, but is up 16% from a year ago.

Analysts responded to Take-Two Interactive’s latest announcements.

Benchmark raised the company’s price target for Take-Two to $210 from $200. He kept a buy rating on the stock after the company made “significant announcements” at Gamescom’s Opening Night, including reporting that “Borderlands 4” and “Mafia: The Old Country” are both slated for release in fiscal 2026.

With “Grand Theft Auto 6” on the near-term horizon and major game announcements at Gamescom, the company’s long-term pipeline is “positioned to drive substantial financial growth,” said the company’s analysts, who identified on Take-Two as “a top. Idea for 2024.”

After Take-Two unveiled teaser trailers at Gamescom for “Borderlands 4” and “Mafia: The Old Country,” with subsequent press releases confirming 2025 releases, Bank of America Securities noted that the next Mafia game was already in the works. company model FY26.

However, BofA said it had assumed Borderlands 4 was a 2027 fiscal year title, based on the view that it was unlikely to be released in the same year as Grand Theft Auto 6, which is reportedly slated for release at the end of the year 2025.

While investors focus on GTA 6’s release timeline, the firm believes the latest title announcements showcase the potential of the rest of the 15-title immersive FY26/27 core slate, which is “probably underappreciated”.

BofA reiterated a buy rating and a $185 price target on Take-Two stock.

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