Take-Two Interactive (NASDAQ: TTWO) shares plummeted over 13% Tuesday, reacting to the company's latest earnings release, but one analyst thinks the stock is “cheap enough.”
Take-Two reported an unexpected loss per share of $1.54 per share on revenue of $1.39 billion. Analysts expected revenue to come in at $1.56 billion.
However, despite the earnings and revenue miss and subsequent share price decline, BofA analyst Omar Dessouky upgraded Take-Two to Buy from Neutral with a price target of $120, down from $130 on Tuesday.
In a post-earnings research note with the heading “From Cheap, to Cheaper, to Cheap Enough on F25 EPS,” the analyst said that at the current price of $94.17, he believes shares now offer “a margin of safety” that eases the risk of GTA 6 being pushed out beyond FY25.
The firm's new price target is based on its FY25 EPS forecast, while the analyst said lower provides shareholders “enough upside to ride out the next year while positioning for multiple expansion.”
Elsewhere on Tuesday, Wedbush analyst Michael Pachter reduced the firm's price target on Take-Two to $140 from $162, keeping an Outperform rating on the shares. Pachter told investors in a memo that the slowdown in mobile gaming resulted in financial results that fell slightly below consensus, and that mobile gaming weakness, along with launch delays and macroeconomic headwinds, led Take-Two to lower full-year 2023 guidance by around $400 million.
Take-Two shares are down over 47% in 2022.