Jefferies Gets Very Bullish on Two Top Video Game Makers

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Published: June 24, 2015 10:40 am

Jefferies has taken a more bullish stance on Take-Two Interactive Software Inc. (NASDAQ: TTWO) and Electronic Arts Inc. (NASDAQ: EA). The firm predicts that the big gains experienced by both companies over the past few years will continue on both industry and company-specific tailwinds.

As for the industry tailwinds, there is an increasing penetration of current-generation game consoles, which is beneficial to each of these companies, allowing for more games to be playable. Ultimately this will result in increased margins for both companies and continued stock gains.

EA is considered to have one of the strongest “multiyear game pipelines” that Jefferies has ever seen.

Take-Two was raised to a Buy rating from Hold with a price target of $35 (versus a $29 prior target and a $28.01 close) at Jefferies. The stock has a consensus analyst price target of $33.49 and a 52-week trading range of $20.13 to $30.80.

Other analysts recently had this to say about Take-Two:

Brean reiterated a Buy rating with a $32 price target.
Cowen upgraded it to Outperform from Market Perform and increased the price target to $36 from $32.
Piper Jaffray has a Buy rating with a price target of $34.

EA was upgraded to a Buy rating from Hold and the price target was raised to $80 from $58 (versus a $66.58 close) at Jefferies. EA has a consensus price target $67.13 and a 52-week range of $31.77 to $67.49. This is a new street-high target, as the prior one was $75.00.

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Other analysts had this to say for EA:

MKM Partners reiterated a Neutral rating.
Wedbush reiterated an Outperform rating.
Brean reiterated a Buy rating and increased the price target to $75 from $66.

So far in 2015, EA shares have gained nearly 42%, and they are up 80% over the past year. Take-Two has not necessarily had a strong 2015 and is relatively even year to date, but shares are up about 30% over the past 52 weeks.

Shares of EA were up 1.9% at $67.81 Wednesday morning. At the same time, Take-Two shares were up 2.4% to $28.68.

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