"Grand Theft Auto V," one of the most anticipated video games of the year, is days away from going on sale, making this a good time to lighten up if you own its maker Take-Two Interactive (TTWO).
That's essentially the word from Pacific Crest, which downgraded the stock to sector perform Wednesday, according to a MarketWatch report. Analyst Evan Wilson indicated that investors have gotten the best of Take-Two, a company that's gained 58% in price this year as of Tuesday's close. Take-Two finished the latest session with a loss of 4.6% at $17.30, but at its low, hit $16.96, a 6.5% drop. The analyst didn't respond to an emailed request to review the research report.
"Grand Theft Auto V," the continuation of a popular series that features car-jackings, street fights, coarse language and generally mature subject matter, goes on sale Sept. 17 for the PlayStation 3 and Xbox 360, with a retail price of $59.99 for the standard edition. The GTA game line, from Take-Two's Rockstar Games unit, has sold more than 100 million units in its history.
The expected success of the new GTA is reflected in the overall sales outlook for Take-Two's current fiscal year, which for analysts' stands at $1.87 billion, according to FactSet. Take-Two itself has estimated total revenue of $1.78 billion to $1.88 billion, up from the top line of about $1.21 billion in the previous year. (A published report from Scotland said the development and marketing costs for GTA V were the equivalent of more than $250 million.)
For Pacific Crest, one of the key worries is that Take-Two's post-GTA game pipeline doesn't impress, the MarketWatch report indicated. New York-based Take-Two has said it does plan to release a few other titles this year, including "NBA 2K14" and "WWE 2K14."
In the broader gaming industry, the next few months are packed, notably with Sony (SNE) releasing the PlayStation 4 and Microsoft (MSFT) putting the Xbox One console on sale ahead of the holiday shopping rush. The "Call of Duty," "Assassin's Creed" and "Battlefield" series will also get their next round of entrants. However, in Pacific Crest's view, once the new product excitement abates, the game industry may face a "correction."