Take-Two Interactive Software, Inc. (NASDAQ:TTWO) Consensus Forecasts Have Become A Little Darker Since Its Latest Report

It's been a good week for Take-Two Interactive Software, Inc. (NASDAQ:TTWO) shareholders, because the company has just released its latest yearly results, and the shares gained 4.6% to US$155. It was a pretty bad result overall; while revenues were in line with expectations at US$5.3b, statutory losses exploded to US$22.01 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Take-Two Interactive Software

Taking into account the latest results, the current consensus from Take-Two Interactive Software's 22 analysts is for revenues of US$5.69b in 2025. This would reflect a satisfactory 6.3% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 86% to US$3.16. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$7.01b and losses of US$1.23 per share in 2025. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The average price target was broadly unchanged at US$176, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Take-Two Interactive Software, with the most bullish analyst valuing it at US$200 and the most bearish at US$120 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Take-Two Interactive Software's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 6.3% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.5% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Take-Two Interactive Software.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 estimates - from multiple Take-Two Interactive Software analysts - going out to 2027, and you can see them free on our platform here.

You can also view our analysis of Take-Two Interactive Software's balance sheet, and whether we think Take-Two Interactive Software is carrying too much debt, for free on our platform here.

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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.