Investing.com – The long-awaited release of the latest installment in Take-Two (NASDAQ:) Interactive’s mega-popular “Grand Theft Auto” franchise should drive “substantial” growth in orders and profitability for the video game maker, according to Investing.com. JPMorgan analysts.
In May, Take-Two set a release date for the game, “GTA VI,” next fall. Many believe the game will be an instant hit among gamers, and analysts predict it could generate billions of dollars in annual sales.
However, the timing of the game’s release caused Take-Two to lower its financial expectations for fiscal 2025. The company now expects orders during the period to be between $5.55 billion and $5.65 billion, up from its previous forecast of just over $7 billion.
Meanwhile, Take-Two laid off 5% of its workforce as it tries to rein in costs in response to broader industry-wide concerns about slowing customer spending hit by inflation.
In a note to clients on Thursday, JPMorgan analysts added that the gaming sector is increasingly focused on maximizing the success of games that have already proven to be successful. They said “consumer engagement and publisher resources” were consolidating around the biggest gaming franchises.
“We believe these trends favor the industry’s big players, with the biggest hits likely to get bigger and mid-tier titles likely to be squeezed out as costs of competition increase,” the analysts said.
For this reason, investor expectations for GTA VI are high, JPMorgan analysts say. Given the success of previous releases such as “GTA V” and “Red Dead Redemption 2”, they expect the game to lead to a sharp “step increase in bookings and profitability” at Take-Two and possibly serve as a “valuation catalyst”. “
Analysts reaffirmed their Outperform rating on Take-Two and raised their December 2024 price target to $200 from $180.