Take-Two Interactive should be a $165 stock: Goldman Sachs

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Take-Two Interactive Software Inc (NASDAQ: TTWO) ended in the green on Thursday after a Goldman Sachs analyst turned bullish on the company behind the world-famous Grand Theft Auto video game.

Take-Two Interactive shares have a 35% upside

Eric Sheridan upgraded this stock to “buy” this morning and said shares could climb to $165. That’s about a 35% upside from here.

He agreed that the near-term outlook may not be as rosy but the long-term investor will do well owning it at the current discount.

Take-Two Interactive’s content pipeline, with investments building in the past few years, should result in improved revenue growth and expanding margins in the coming years as games move from development to launch.

Shares of Take-Two Interactive are down more than 30% for the year at the time of writing.

In August, the Nasdaq-listed firm reported better-than-expected revenue for its fiscal first quarter.

Sheridan is bullish on the acquisition of Zynga

Take-Two Interactive started this year with a $12.70 billion acquisition of Zynga Inc.

Aggressively expanding into mobile gaming, the analyst added, will also unlock upside potential for the video game holding company. His note reads:

Looking to FY24 and beyond, we modestly raise our bookings assumptions as we expect greater sell-through in units (as installed base grows and nearly half of the ~93 titles pipeline laid out in Q4 2020 earnings comes to market.

Sheridan also expects a meaningful benefit to margin once key titles like GTA VI hit the market. He also lifted operating estimates for fiscal 2023 but only slightly.

Global gaming revenues are estimated to top $320 billion by 2026.

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