UBS expects Grand Theft Auto VI to drive a step-up in bookings, earnings, and free cash flow despite softer quarterly performance.
- UBS analyst Christopher Schoell lowered TTWO price target to $295 from $300 but maintained a ‘Buy’ rating, according to The Fly.
- The firm cut its fiscal 2027 and 2028 bookings estimates to $8.7 billion and $9.1 billion, respectively, from $8.9 billion and $9.2 billion.
- Take-Two's management reiterated its fiscal 2027 bookings outlook of $8 billion to $8.2 billion.
Take-Two Interactive (TTWO) shares were in the spotlight on Tuesday after a price target cut from UBS, with analyst Christopher Schoell lowering his target to $295 from $300 while maintaining a ‘Buy’ rating.
Despite mixed quarterly results, Schoell believes unprecedented Grand Theft Auto VI preorders, upcoming content releases and new platform launches support a significant increase in bookings, earnings and free cash flow following the game's launch, according to a note cited by TheFly.
The firm expects most initial GTA VI sales to occur around the launch and in the following weeks, Investing.com reported. UBS believes Take-Two is taking a conservative approach by maintaining its annual bookings guidance.
UBS Trims Estimates But Sees Long-Term Growth
UBS lowered its fiscal 2027 and 2028 bookings forecasts to $8.7 billion and $9.1 billion, respectively, from $8.9 billion and $9.2 billion, Investing.com reported.
The firm also reduced its adjusted earnings per share (EPS) estimates to $7.21 for fiscal 2027 and $10.86 for fiscal 2028, citing softer performance from Rockstar Games. However, UBS expects new content, platform expansion and upcoming major titles to establish a higher baseline for profitability and cash generation.
What Take-Two's Latest Quarter Shows
Take-Two reported second-quarter net bookings of $1.60 billion, down 18% year over year and below its $1.62 billion to $1.67 billion guidance range. Management attributed the shortfall to NBA 2K27, which delivered the franchise's second-highest launch bookings but fell below internal expectations.
Recurrent consumer spending declined 9%, compared with management's forecast for a 5% decline. Meanwhile, CEO Strauss Zelnick said GTA VI preorders were tracking “far in excess of our initial expectations.”
When Schoell questioned why stronger preorders had not prompted a guidance increase, Zelnick said the company preferred to wait for actual launch performance. “We tend to avoid claiming success before it occurs,” he said.
GTA VI Launch Could Reset Earnings Trajectory
Take-Two maintained its fiscal 2027 net bookings forecast of $8 billion to $8.2 billion ahead of GTA VI's November 19 launch. The company expects third-quarter bookings of $3.35 billion to $3.50 billion, compared with $1.76 billion a year earlier.
Management also expects operating cash flow exceeding $1 billion for the fiscal year and a net cash position by year-end.
Discussing longer-term growth, Zelnick said Take-Two expects to “set a new baseline for performance going forward,” although he declined to provide formal fiscal 2028 guidance.
The November 19 launch will provide the first indication of whether unusually strong preorders translate into the sustained earnings and cash flow growth UBS anticipates.
What Retail Thinks About TTWO Stock
On Stocktwits, retail investors’ sentiment around TTWO stock improved to ‘extremely bullish’ on extremely high user message volume.
So far this year, TTWO stock has plunged over 17%. In comparison, the Communication Services Select Sector SPDR Fund (XLC), which holds Take Two shares, has tumbled over 8% over the same period.
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