Take-Two's GTA 6 a 'likely winner' - EA's FIFA break-up a potential long-term threat, says HSBC
HSBC initiated Take-Two Interactive Software (NASDAQ:TTWO) with a Buy rating and $170 price target and Electronic Arts (NASDAQ:EA) with a Hold rating and $128 price target in a note to clients Tuesday.
Focusing on TTWO, HSBC analysts said its much anticipated Grand Theft Auto 6 game is «a likely winner.»
«With GTA5 sales at over 180m copies, we see significant potential upside to our conservative forecast of 30m copies in year one (and 110m copies through FY30e) and expect the title to prove more lucrative than its predecessor given the growth of in-game monetization since,» the analysts wrote.
HSBC also noted that TTWO has a strong mobile presence following its acquisition of mobile game developer Zynga in 2022, while they also pointed to «synergies and tax relief ahead.»
On EA, the analysts said that while FIFA's football World Cup helped drive record-breaking sales of FIFA23 into the tournament and boosted live spending, company guidance and trailing 12-month growth rates of bookings point to a slowdown for revenues ahead.
They also believe the FIFA break-up (EA Sports' FIFA game will now be called EA Sports FC after its partnership with the football federation came to an end) is more of a long-term threat to the company. They also mentioned that the company is «struggling with mobile.»
«We initiate with a Hold rating given a more mixed development record, relative weakness in mobile, potentially greater competition ahead, and lack of catalysts, but balanced by ongoing cost optimization and fair valuation,» they wrote.
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