Take-Two Interactive (TTWO): Assessing Valuation After Blockbuster Earnings and Bullish Guidance

If you have been watching Take-Two Interactive Software (TTWO) lately, this week’s action probably caught your eye. The company just posted quarterly results that shattered Wall Street’s expectations, with adjusted EPS coming in more than twice as high as anticipated and revenue climbing over 12% from last year. Management also signaled confidence by projecting full-year revenue at the higher end of guidance. Ongoing cloud gaming partnerships have continued to make headlines as well. With these numbers out, investors are now weighing what comes next for TTWO stock.

This surge in optimism seems to be reflected in the stock’s momentum. Over the past year, Take-Two shares have soared over 42%, and year-to-date returns are above 25%, leaving most of its peers trailing. Recent news has not just been about earnings. Expansion into India with the Mafia: Definitive Edition and significant moves in cloud gaming have resurfaced as key themes. Negative developments, such as job cuts or insider selling, have so far been overshadowed by the company’s ongoing growth story and upbeat projections.

With such a strong run and bullish sentiment, some investors may be considering whether Take-Two Interactive Software is still undervalued or if future growth is already fully reflected in the price.

Most Popular Narrative: 12.7% Undervalued

According to community narrative, Take-Two Interactive Software is currently trading at a notable discount to its estimated fair value. Analysts believe several catalysts, including continued mobile and in-game content growth, global expansion, and regulatory changes, could unlock further upside for the company in coming years.

Take-Two's mobile portfolio is experiencing outsized growth through direct-to-consumer initiatives, enhanced personalization, new event-driven features, and benefits from broader access provided by high-speed internet and mobile penetration. This likely lifts both net revenue and margins as distribution costs decline.

Ready to discover why so many analysts see hidden potential in Take-Two’s current price? Get behind the curtain of this bullish call. The real excitement is in the growth forecasts, upgraded earnings trajectory, and the bold profit assumptions that underpin this valuation. Curious about exactly what kind of turnaround analysts are betting on? If you love big financial leaps and controversial forecasts, you won’t want to miss the details powering this price target.

Result: Fair Value of $262.31 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising development costs and reliance on blockbuster franchises could easily challenge even the most bullish forecasts if industry conditions shift unexpectedly.

Find out about the key risks to this Take-Two Interactive Software narrative.

Another View: Discounted Cash Flow Model

Looking at Take-Two Interactive Software through the lens of our DCF model offers a different angle on its value. This approach also finds the company undervalued, supporting the optimism around the stock’s potential. However, are these growth assumptions realistic, or simply hopeful?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Take-Two Interactive Software for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Take-Two Interactive Software Narrative

If you are keen to dive deeper or want to build your own perspective, it takes just a couple of minutes to create your own analysis. So why not do it your way?

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Take-Two Interactive Software.

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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.

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