Take-Two Interactive Software Inc (Nasdaq: TTWO) has leveled up its revenue guidance for the current quarter, sending its stock higher by more than 12 percent Wednesday morning. Take-Two’s solid outlook for the critical holiday shopping season comes after video game competitors disappointed Wall Street with their outlooks this earnings season.
Take-Two reported fiscal second-quarter earnings per share of $1.09 on revenue of $577 million. Both numbers topped consensus analyst estimates of 74 cents and $511 million, respectively. Digital revenue was up 31 percent to $303 million.
Looking ahead to the current quarter, Take-Two management issued revenue guidance of $610 million to $660 million, well above the $546 million analysts were anticipating. Take-Two also raised its full-year adjusted revenue forecast from a previous range between $1.65 billion and $1.75 billion to a new range between $1.93 billion and $2.03 billion.
On the earnings call, the company said it has now sold more than 85 million total units of its “Grand Theft Auto” franchise. It also said its new “NBA 2K18″ game has been performing well since it was released for the Nintendo Co. Switch console.
Take-Two’s strong numbers and positive market reaction are in stark contrast to the disappointing guidance issued by Electronic Arts (EA) and Activision Blizzard (ATVI) this earnings season. In the past month, Take-Two stock is up 10.9 percent, while Activision is down 1.4 percent and EA is down 5.9 percent.
“Recurrent consumer spending growth and ‘NBA 2K18′ unit sales greatly exceeded our street-high expectations, prompting a sharp upside revision to our model,” KeyBanc analyst Evan Wingren says. “We now see at least $6 per share in earnings power in fiscal 2019, driven by digital growth, ‘Red Dead Redemption 2,’ and likely ‘Borderlands 3.’”
In October, Oppenheimer analyst Andrew Uerkwitz said Take-Two is the best video game stock of the group.
“We believe Take-Two Interactive stands to benefit from both company-specific factors as well as industry tailwinds driving both top-line growth and profitability gains,” Uerkwitz said. “We believe industry trends of a shift to digital – both game downloads and increasing consumer willingness to spend on downloadable content – will drive long-term margin expansion.”
Oppenheimer has…
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