Take-Two

Take-Two Interactive Software Inc. (TTWO - Get Report) shares traded at an eight month high Tuesday after the video game maker posted stronger-than-expected first quarter earnings and boosted its full-year profit outlook. 

Take-Two, which makes video games such as NBA 2K and Grand Theft Auto V, said earnings for the three months ending in June, its fiscal first quarter, fell just under 34% from the same period last year, but topped Street forecasts at 41 cents per share. Group revenues, however, rose 39% to $540.5 million and net bookings rose 46% to $422.2 million.

Looking into its current fiscal year, Take-Two sees full-year sales in a range of $2.83 billion to $2.93 billion and GAAP earnings of between $3.71 and $3.96 per share. Second quarter net bookings, the company said, should come in between $860 million to $910 million, compared to $583 million last year, thanks to gains from NBA 2K 20, Borderlands 3, Grand Theft Auto and Red Dead Redemption 2.

"Growing at the same rate will become more challenging, but we have this wonderful situation in the marketplace, which is the sector has extraordinary tailwinds, and we expect those to continue and that's driven by the growth in the cohort that enjoys video game," president Karl Slatoff told investors on a conference call late Monday. "Remember people consume for the rest of their lives, the entertainment that they love the age of 17, the video game business is about 30 years old, 35 years old effectively and the average player age today is around 37 or 38."

"Ten years ago, there was no mobile business and today that's $60 billion marketplace. And at the same time, that sprung up and grown the core console and PC businesses continue to grow at a rapid clip," he added. "So this industry is the most rapidly growing industry in entertainment and that's not going to change for the next 10, 20, 25 years."

Take-Two shares were marked 11.2% higher in early Tuesday trading to change hands at $128.23 each, the highest since November 7 and a move that would extend the stock's year-to-date gain to around 24.5% while valuing the New York based gamemaker at around $14.4 billion.

"Take-Two's 1QFY20 report was high-quality as it showcased not only the improving mix of recurrent consumer spend from (Grand Theft Auto) Online and NBA 2k," said Credit Suisse analyst Stephen Ju, who carries a neutral rating with a $125 price target. "But also the lasting durability of ongoing sales of (Grand Theft Auto V) as well, which has now sold in 110mm units."