A wave of downbeat analyst reports buffeted the video-game sector on Wednesday, but only

THQ

(THQI)

saw its shares stay underwater for long.

THQ's stock was roiling from the aftereffects of partner

Pixar's

(PIXR)

decision Tuesday to delay the release of its next movie,

Cars

, by six months. THQ holds the license to make games based on Pixar's films. The delay means that the company likely won't meet current revenue or earnings expectations for fiscal 2006, said Michael Wallace, an analyst with UBS.

"This is not a fundamental issue, purely a timing issue. But the game delay does magnify the issue of a slower market in calendar 2005 for the industry," Wallace said in a report issued Wednesday, downgrading his rating on the stock from buy to neutral. (THQ has been an investment client of UBS in the last year.)

Sales of Pixar-related titles have accounted for some 20% of THQ's revenues in recent years, noted Michael Pachter of Wedbush Morgan Securities. The delay has opened up a revenue gap that the company may have a hard time filling, he said in a report issued Wednesday. Additionally, the delay with

Cars

will likely push back subsequent Pixar productions, Pachter said.

"Although the potential revenue shortfall may cause a lowering of THQ's earnings for

fiscal 2006, it is not clear to us whether the shortfall will ever be fully recovered," said Pachter, who maintained his hold rating on THQ shares. "We believe that the shift in the release date of

Cars

highlights the risk inherent in licensed content, where the publisher lacks control over the timing of game releases, and earnings are more volatile." (Wedbush Morgan does not have investment banking business with THQ.)

In recent trading, shares of THQ were off $1.16, or 4.9%, to $22.37.

THQ wasn't the only video-game maker dinged by a sell-side analyst Wednesday. William Lennan at W.R. Hambrecht downgraded both

Electronic Arts

(ERTS)

and

Take-Two Interactive

(TTWO) - Get Report

on Wednesday, citing valuation concerns and the lack of positive news that might push shares higher, respectively.

Meanwhile, Elizabeth Osur at Citigroup Smith Barney initiated coverage on the video-game sector in a report issued late Tuesday. While Osur put buy ratings on Electronic Arts and

Activision

(ATVI) - Get Report

, she put a hold rating on Take-Two.

Despite those reports, shares of Electronic Arts, Activision and Take-Two were all up in recent trading.

Many of the video-game publishers have seen their stocks post nice gains over the last several weeks as the holiday season has kicked in. But the sector has seen growing skepticism in recent days. On Tuesday, for instance, Activision shares fell 5% after Pachter

removed the stock from Wedbush Morgan's focus list, saying that the company's shares had already priced in any potentially good news for this fiscal year.

With November sales data expected on Thursday, some publishers may see disappointing results, analysts have warned. Many analysts have expected holiday sales to be dominated by

Microsoft's

(MSFT) - Get Report

Halo 2

, Take-Two's

Grand Theft Auto: San Andreas

and a select few other titles.

But W.R. Hambrecht's Lennan believes Take-Two's stock likely won't see much more benefit from

San Andreas

sales and has a good chance of falling from its current level. Besides its

Grand Theft Auto

franchise, the company has few other top titles, he said. Take-Two likely won't see much good news on the sales front until it releases its next set of

ESPN

sports titles, which likely won't happen until the summer, he said.

"We thought back in July -- when we first confirmed exceptional retail expectations for

Grand Theft Auto: San Andreas

-- that TTWO shares would march straight into the high $30s and perhaps to $40 or more," Lennan wrote. "The failure of TTWO shares to get past those levels despite a stellar

GTA

launch leaves us wondering what will be the next catalyst to $37 and beyond."

Lennan downgraded the company's shares to hold from buy; Take-Two is not an investment banking client of W.R. Hambrecht.

While both the

Grand Theft Auto

and

ESPN

titles are likely to drive future profits, Take Two faces significant risks, noted Smith Barney's Osur in her report. The company is challenging market leader Electronic Arts in the sports arena. Meanwhile, the strategy to release titles for exclusive periods for

Sony's

(SNE) - Get Report

PlayStation consoles could hurt the company if Microsoft continues taking market share with its Xbox, she said.

The company is taking steps to broaden its portfolio of titles, which, along with the increasingly popularity of video games, should benefit the stock, Osur said.

"However, our enthusiasm is limited based on high execution risk

and lower margins than the peer group," she said.

Despite these assessments, Take-Two shares were recently up 8 cents, or 0.2%, to $34.59.

Electronic Arts also appeared buoyant despite Lennan's report on it. Shares of the market leader have passed his $47 price target, the analyst noted. But the company has a good chance of posting disappointing holiday-quarter results and of giving below-consensus guidance for 2006, Lennan said.

"We think the revenue growth and operating margin implied by

the Street's fiscal 2006 consensus, while achievable, are at the aggressive end of the spectrum, and thus think the revision bias is to the downside," Lennan said. "We also suspect that company management would like to talk down expectations so they can concentrate more on next-generation investment and less on the Street expectations treadmill."

In recent trading, shares of Electronic Arts were up 42 cents, or 0.8%, to $52.50.