TTWO Posts Better-Than-Expected Q1 Results

Analysts at MKM Partner reiterate their “neutral” rating on Take-Two Interactive (NASDAQ: TTWO), while raising their estimates for the company. The target price for TTWO is set to $9.

TTWO has posted better-than-expected Q1 results. “Although Take-Two Interactive announced a new cost-cutting plan, we are concerned only a very small portion of the financial upside is reflected in the company’s higher FY10 guidance,” the analysts say. The significant upside to the 1QFY10 performance, relative to the expectations, and cost savings of $8 million in FY10 and $15 million annually are positive events, the analysts say.

“However, with the midpoint of the company’s EPS guidance increasing just $0.08, to a loss of $0.50, we are disappointed with the lack of flow-through incorporated into Take-Two’s forecast. Bottom line for the company remains the fact that Take-Two is unable to be profitable in a year with its strongest non-GTA release slate," the analysts add.

MKM Partner has raised the FY10 revenue and EPS estimates from $853 million and a loss of $0.56, respectively, to $862 million and a loss of $0.48, respectively, respectively.

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