Take-Two, THQ shares slip
EmptyNEW YORK -- Shares of Take-Two Interactive Software Inc. retreated Tuesday after an analyst downgraded the video game maker along with THQ Inc., saying that most of the good news for the industry is already reflected in share prices.
Both companies' shares are up considerably since the summer. Even with a more than 5% decline Tuesday, Take-Two's stock is up 64% since trading around $9 in July.
American Technology Research analyst P.J. McNealy downgraded Take-Two to "Neutral" from "Buy," saying that expectations for the long-anticipated launches of Sony's and Nintendo's next-generation gaming consoles, the PlayStation 3 and Wii, set for November, are already reflected it their stock prices.
"We believe that while excitement and hype (such as in the PS3 pre-order news from last week) will continue, there is little upside at this point with hardware shipment quantities, many launch titles, and hardware and software pricing now disclosed," the analyst wrote in a note to investors.
Take-Two publishes the "Grand Theft Auto" series, a hugely popular and bloody game that lets players steal cars and shoot police officers and pedestrians while carrying out missions.
"The next version of the wildly successful GTA version is coming, and much of Take-Two's valuation, in our opinion, is tied to that franchise," the analyst wrote.
On Tuesday, Take-Two's Rockstar Games label released its new game, "Bully," in North America for the PlayStation 2.
The game, rated "T" for Teen, follows 15-year-old Jimmy Hopkins as he navigates the world of high school bullies, girls and cliques. Its slingshots and pranks are a far cry from the machine guns and rocket launchers of "Grand Theft Auto," but the game has received its fair share of criticism.
A Florida attorney and longtime foe of video game violence sought to ban "Bully" before it was released, but a judge dismissed the complaint earlier this month. The lawyer, Jack Thomson, is also representing the plaintiffs in two pending lawsuits against Rockstar and Take-Two that blame "Grand Theft Auto" for real-life slayings.
And, according to GameIndustry.biz, a video game industry Web site, the U.K.'s largest electronics retailer DSG International has refused to sell Bully's European version, "Canis Canem Edit."
One of the company's store chains, Currys, called the game inappropriate for its "family-friendly image," according to the Web site.
DSG's other stores include PC World and Dixon, which sell "Grand Theft Auto" games.
Shares of Take-Two were recently down 50 cents, or 3.1%, at $15.20 on the Nasdaq.
McNealy downgraded THQ Inc. to "Neutral" from "Buy," and said he expects the company to beat revenue and earnings estimates for the fiscal second quarter, which ended in September.
"THQ has been the one video game publisher to deliver on expectations over the past 18 months as its peers have faltered, missing quarters and re-setting guidance, and has been rewarded with a higher stock price," the analyst wrote.
THQ's shares slid 89 cents, or 3%, to $30.31 on the Nasdaq, but the stock is still up more than 40% since the beginning of July.
The analyst kept his ratings of Activision Inc. and Electronic Arts Inc., the sector's leader, at "Buy."
Activision's shares fell 16 cents to $15.35 and Electronic Arts slid 24 cents to $55.85 on the Nasdaq.