Video game stock Take Two Interactive looks cheap and can rally 33%, JPMorgan says

Shares of video game company Take-Two Interactive look attractive after a pullback this year, according to JPMorgan. JPMorgan on Thursday rated Take-Two overweight after a period of restriction. The firm also set a $175 price target on the stock, implying 33.2% upside. Take-Two shares are down about 26% in 2022, underperforming the S & P 500’s more than 13% decline. “Execution on the pipeline and integration is a risk, but current valuation provides a degree of safety and is more than balanced by potential upside. Looking across our coverage, we note TTWO is among the few stocks offering both value and growth and with limited risk to macro factors such as inflation or recession,” JPMorgan’s David Karnovsky said in a note. The company behind franchises such as Grand Theft Auto and NBA 2K completed its acquisition of mobile gaming firm Zynga in May. “Take-Two’s valuation we think reflects depressed sentiment toward mobile gaming generally, with the sector still navigating platform privacy changes and comping some pandemic benefit. We expect these headwinds to ease in the coming quarters,” Karnovsky said. JPMorgan believes Take-Two can expand its mobile portfolio as the environment for mergers and acquisitions is less competitive at the moment. The firm is bullish on Take-Two’s pipeline of content in the next few years. “Take-Two is at the start of a significant ramp in content,” Kernovsky said. “Excluding annual sports titles (NBA 2K, PGA 2K, WWE 2K) and what’s been announced, we estimate there are 13 other immersive core games due for release over the next three years, and we expect this to be comprised of sequels and new IP.” –CNBC’s Michael Bloom contributed reporting.

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