Shares of Take-Two Interactive Software Inc. TTWO, -5.34% are down more than 5% in Tuesday morning trading after BMO Capital Markets analyst Gerrick Johnson downgraded the stock to underperform from market perform. He also lowered his target price to $80 from $119. Johnson is concerned that while initial sales of “Red Dead Redemption 2” were strong, “buzz around this once highly anticipated game has dissipated markedly.” This suggests to Johnson that Take-Two might see a “lapse” in engagement, which could make it hard for the company to “monetize to desired levels.” He expects continued pressure on videogame stocks, including Take-Two. The rising popularity of new free-to-play games “could pivot the video game industry away from one that generates steady streams of high margin revenue back to more of the hit-driven model we saw in prior generations.” Shares of peer Electronic Arts Inc. EA, +3.64% are up 3% in morning trading after the company announced strong user numbers for its “Apex Legends” title. Activision Blizzard Inc. ATVI, +3.17% reports results this afternoon. Take-Two’s shares have fallen 19% over the past three months, while the S&P 500 SPX, +1.00% has risen 0.3%.
Take-Two Interactive Software Inc. shares were trading at $89.05 per share on Tuesday morning, down $4.39 (-4.70%). Year-to-date, TTWO has declined -13.49%, versus a 9.24% rise in the benchmark S&P 500 index during the same period.
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