Analysts say Take-Two is too optimistic

Analysts from Wedbush Morgan Securities and Nollenberger Capital Partners believe that Take-Two Interactive‘s guidance till the end of fiscal year 2007 was thresholds above optimistic. The publishing company recently published its financial performance and delivered hopes that it will continue to improve in the near future, thanks to BioShock and Manhunt 2.

Now although Michael Pachter of Wedbush Morgan said that investor confidence was going strong for Take-Two, he isn’t quite ecstatic about the company’s positive views for the rest of the fiscal year. He mused that such confidence was misguided and that the company has a lot to make up for in GAAP losses. He now says:

Although it may appear that the company’s guidance was better than expected, we believe that the FY:08 consensus estimate was artificially low, and reflected widespread skepticism about the company’s ability to deliver solid profits next year.

Todd Greenwald of Nollenberger seems to share that sentiment, stating that Take-Two’s quarterly results could have been a little more promising to justify actual confidence. And while the company’s cash balance seems to dwindle alarmingly (US$ 138 million in January, US$ 109 million in April, US$ 61 million in July), he does offer that investors wait for more developments to truly judge if their money is worth giving in:

Take-Two delivered July quarter results that were largely in line and provided an FY08 outlook that was disappointing on the top line but better than expected on the bottom line, suggesting big expectations for cost reductions and margin expansion… While the company’s earnings outlook for 2008 is impressive, we note that it looks overly optimistic to us; we prefer to wait and see more progress before assuming Take-Two can return to peak gross margin levels in FY08.

Analysts from Wedbush Morgan Securities and Nollenberger Capital Partners believe that Take-Two Interactive‘s guidance till the end of fiscal year 2007 was thresholds above optimistic. The publishing company recently published its financial performance and delivered hopes that it will continue to improve in the near future, thanks to BioShock and Manhunt 2.

Now although Michael Pachter of Wedbush Morgan said that investor confidence was going strong for Take-Two, he isn’t quite ecstatic about the company’s positive views for the rest of the fiscal year. He mused that such confidence was misguided and that the company has a lot to make up for in GAAP losses. He now says:

Although it may appear that the company’s guidance was better than expected, we believe that the FY:08 consensus estimate was artificially low, and reflected widespread skepticism about the company’s ability to deliver solid profits next year.

Todd Greenwald of Nollenberger seems to share that sentiment, stating that Take-Two’s quarterly results could have been a little more promising to justify actual confidence. And while the company’s cash balance seems to dwindle alarmingly (US$ 138 million in January, US$ 109 million in April, US$ 61 million in July), he does offer that investors wait for more developments to truly judge if their money is worth giving in:

Take-Two delivered July quarter results that were largely in line and provided an FY08 outlook that was disappointing on the top line but better than expected on the bottom line, suggesting big expectations for cost reductions and margin expansion… While the company’s earnings outlook for 2008 is impressive, we note that it looks overly optimistic to us; we prefer to wait and see more progress before assuming Take-Two can return to peak gross margin levels in FY08.