Shares of video-game software makers got a boost Thursday after an analyst upgraded
Take-Two's stock has been trading at a significant discount to its peers due to perceptions of the company being overly dependent on just one hit title and because of a long-running
Securities and Exchange Commission
investigation, noted Prudential analyst Brent Thill, in a research report.
But the company has taken steps recently to address both of those concerns, reaching a
settlement agreement with the SEC and taking significant steps to diversify its software lineup, Thill said.
"We believe ... the current wide valuation gap vis-a-vis the
video-game software group is unwarranted," said Thill, whose company has not done recent investment banking business for Take-Two. Thill upped his rating on Take-Two's shares to neutral weight from underweight and maintained his $28 price target on the stock.
In recent trading, Take-Two shares were up 65 cents, or 2.6%, to $26.15.
Although Thill's report focused on Take-Two, it seemed to buoy shares of the company's rivals as well. In recent trading, shares of
were up 1.7%;
, 5.6%; and
, less than 1%.
The video-game sector has done fairly well in the year to date, with all of the major stocks -- other than Electronic Arts -- up 10% or more. But the companies could struggle later this year and into next as the industry goes through a console transition.
plans to release its updated console, the Xbox 360, this fall, while industry leader
plans to release its next version of the PlayStation console next spring. Such transitions have typically been marked in the past by sluggish sales and increased costs.