Here's What Analysts Are Forecasting For Take-Two Interactive Software, Inc. (NASDAQ:TTWO) After Its Third-Quarter Results
Last week, you might have seen that Take-Two Interactive Software, Inc. (NASDAQ:TTWO) released its third-quarter result to the market. The early response was not positive, with shares down 7.2% to US$155 in the past week. Revenues of US$1.3b arrived in line with expectations, although statutory losses per share were US$0.54, an impressive 25% smaller than what broker models predicted. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Take-Two Interactive Software
Taking into account the latest results, the current consensus from Take-Two Interactive Software's 23 analysts is for revenues of US$7.38b in 2025. This would reflect a substantial 37% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 88% to US$1.01. Before this latest report, the consensus had been expecting revenues of US$7.74b and US$0.31 per share in losses. While next year's revenue estimates dropped there was also a considerable increase to loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
There was no major change to the consensus price target of US$175, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Take-Two Interactive Software analyst has a price target of US$200 per share, while the most pessimistic values it at US$130. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Take-Two Interactive Software's rate of growth is expected to accelerate meaningfully, with the forecast 28% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 15% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.1% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Take-Two Interactive Software to grow faster than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Take-Two Interactive Software. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Take-Two Interactive Software going out to 2026, and you can see them free on our platform here.
Even so, be aware that Take-Two Interactive Software is showing 1 warning sign in our investment analysis , you should know about...
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.