New Trade for July 21st, 2021

Stocks were mixed moving into today’s session with the Dow looking to continue its rebound.  The blue-chip index got a boost from earnings beats and subsequent gains from Coca-Cola (KO) and Johnson & Johnson (JNJ). The S&P 500 was slightly higher in early trading and the Nasdaq was slightly lower.

Digital currency enthusiasts will be tuned in today to “The B Word” event. At 2pm, Elon Musk, Cathie Wood and Jack Dorsey are scheduled to discuss digital currencies while encouraging adoption of the technology.  Several online currencies climbed in anticipation of the event.  

The release and addition of new video games into popular platforms and impressive gaming console launches from Microsoft (MSFT) and Sony (SONY) should enable the gaming industry to maintain its user base, even as consumers return to outdoor activities.  Based on its latest developments, the popular video game stock featured in today’s trade alert should witness substantial growth in the coming months.  Continue reading to find out what sets this game developer apart from its peers.  

New York based, Take-two Interactive Software, Inc. (TTWO) develops, publishes and distributes interactive entertainment software games and consoles.  The company provides its products to millions across the globe through physical retail, digital download, online platforms and cloud streaming services.  The company is expanding rapidly through strategic acquisition, moving toward its goal of becoming the most creative, innovative and efficient entertainment company.   

In early July TTWO took the leap to acquire French-based Dynamixyz, a privately owned company that develops high-quality 3D facial synthesis/analysis for animation studios and computer game developers. The acquisition is the company’s latest strategic initiative to invest further in its internal development capabilities.  Dynamixyz will operate as one of TTWO’s divisions and work exclusively with its publishing labels and studios.  

Just one month prior to that, in June TTWO acquired Serbian mobile game developer,  Nordeus for around $378 million.  The acquisition further fortifies Take-two’s mobile game business and broadens its sports portfolio with its premier soccer offering.  Over the last decade Nordeus’ Top Eleven have expanded its audience, revenue and profitability by introducing ongoing gameplay and live-ops innovations that continue to drive consumer engagements.

For the most recent quarter ended March 31, TTWO’s net revenue increased 10.4% year-over-year to $839.43 million. The company’s gross profit came in at $559.78 million, up 53.4% from the prior-year period. TTWO’s income from operations has been reported at $255.82 million, representing a 109.9% year-over-year rise. While its net income increased 78.3% year-over-year to $218.81 million, its EPS increased 75.7% year-over-year to $1.88. The company had $1.42 billion in cash and cash equivalents as of March 31.

Analysts expect TTWO’s revenue to decline 3.7% in the current year and 20.6% next year. However, its EPS is expected to increase 45.2% next year. Analysts expect the stock’s EPS to grow at a 13.7% rate  per annum over the next five years.

Of 28 polled analysts 20 rate TTWO a Buy and 8 rate it a Hold.  There are no Sell ratings for TTWO.  A median 12-month price target of $220 represents a nearly 31% increase from its current level.  The company is set to report earnings on August 7th.   

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