Analyst Forecasts For Take-Two Interactive Software, Inc. (NASDAQ:TTWO) Are Surging Higher

Shareholders in Take-Two Interactive Software, Inc. (NASDAQ:TTWO) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. The market may be pricing in some blue sky too, with the share price gaining 12% to US$124 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After the upgrade, the 19 analysts covering Take-Two Interactive Software are now predicting revenues of US$6.8b in 2023. If met, this would reflect a sizeable 93% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 24% to US$4.72. Prior to this update, the analysts had been forecasting revenues of US$4.0b and earnings per share (EPS) of US$2.61 in 2023. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for Take-Two Interactive Software

As a result, it might be a surprise to see that the analysts have cut their price target 10.0% to US$183, which could suggest the forecast improvement in performance is not expected to last. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Take-Two Interactive Software at US$231 per share, while the most bearish prices it at US$141. This shows there is still some 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Take-Two Interactive Software's rate of growth is expected to accelerate meaningfully, with the forecast 93% annualised revenue growth to the end of 2023 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 11% 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 take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The declining price target is a puzzle, but still - with a serious upgrade to this year's expectations, it might be time to take another look at Take-Two Interactive Software.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential concerns with Take-Two Interactive Software, including its declining profit margins. You can learn more, and discover the 2 other concerns we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.