A new report by Janco Partners analyst Mike Hickey raised the price target for publisher Take-Two's stock on expectations of strong sales for the company's original and franchise IP in the next two years.
Though Hickey thinks the company will likely go through its entire next fiscal year (April 2011 through March 2012) without a release in the popular Grand Theft Auto series, he expects the release of games like Max Payne 3 and L.A. Noire will help buoy the company's earnings during that time.
After that, Hickey sees an "enormous earnings event" in fiscal 2012 with the release of Grand Theft Auto V generating more than $750 million for the company through over 16 million estimated sales.
"The PS3 / 360 US installed base was 14 million in April ’08 when GTA IV was released," Hickey writes. "By the end of calendar year ’10, we are modeling for 41 million U.S. units, up 185 percent; providing a significantly larger addressable market."
The analyst also sees BioShock Infinite generating an estimated 4 million sales in fiscal 2012, creating $182 million in revenues for Take-Two.
Hickey also expressed continued enthusiasm for the traditional boxed retail market, which remains a focus for Take-Two, despite a surge in industry interest for digitally distributed casual and mobile titles.
"While the generic NPD market barometer shutters from the continual unwinding of casual game sales, core gamer hardware (PS3 / 360) sales trends remain compelling, a building platform continuum for future sales growth," Hickey writes.
For the fiscal quarter that ended in October, Hickey sees Take-Two beating Wall Street expectations and reporting slightly increased revenues from the same quarter a year earlier, generating much higher net income in the process.