Shares of video game publisher Take-Two Interactive (TTWO -1.23%) are up 56% year to date as of this writing, handily outperforming the otherwise impressive 23% gain for the S&P 500. In short, Take-Two stock was a good stock to own in 2023.
TD Cowen analyst Doug Creutz also believes Take-Two stock is one to own for 2024. The analyst just gave the stock a price target of $173 per share, adding it to the list of best stock ideas for 2024, according to StreetInsider.
Here’s what Take-Two has coming
As a video game publisher, Take-Two has certain core franchises that are a big part of the business. According to Creutz, the company’s pipeline of forthcoming games is “robust” heading into the new year.
Investors should note that Take-Two’s fiscal year can be really confusing. Its most recent quarter was the fiscal second quarter of 2024, which ended in September. Fiscal 2025 starts in April 2024.
For fiscal 2025 (which mostly covers next year), Take-Two’s management expects net bookings of about $8 billion. That’s a huge jump from the roughly $5.5 billion it expects in fiscal 2024. And it’s due to the aforementioned “robust” pipeline of video game title releases.
Fiscal 2026 could be even bigger for Take-Two from this perspective. One of its biggest and longest-running franchises is Grand Theft Auto, and the greatly anticipated Grand Theft Auto 6 is due in 2025, more than a decade after its predecessor.
In short, Take-Two’s business is expected to make a big jump in the coming year — beyond thanks to new game releases. The only caveat to a bullish outlook is that the recent acquisition of Zynga is expected to contribute meaningfully to bookings and better profitability.
Zynga is helping Take-Two grow its top line, but it’s also contributing to higher operating expenses. Management will need to make more progress in integrating Zynga into the company and reduce expenses for Take-Two’s overall profits to encounter a big enough jump to maintain Creutz’s price target in the coming year.
Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Take-Two Interactive Software. The Motley Fool has a disclosure policy.
