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Take Two Software (NASDAQ:TTWO), a video game company which has been battered by financial disappointment, stock-options backdating issues, management turnover and criticism over the graphic nature of its flagship Grand Theft Auto franchise, is about to suffer the consequences.

Four large institutional investors who together control 46% of the company’s stock have launched a proxy contest for control of the Take Two board. The group includes OppenheimerFunds, SAC Capital, D.E. Shaw and Tudor Investments. The group plans to nominate six board members, which will give them voting control of what is now a member board, then oust the other three and boost out CEO Paul Eibeler.

The news drove the stock higher yesterday - the shares gained more than 9%, or $1.62 to $19.23.

But the real question is whether the company can be fixed.

Clyde Montevirgen, an analyst at Standard & Poor’s, yesterday raised his rating on the stock to Hold from Sell. “We think this news and lower fiscal year expectations reduce risk and improve investor sentiment,” he wrote. He raised his price target on the stock to $22, from $15.

Dean Gianokukos, an analyst at J.P. Morgan, reiterated his Overweight rating on the stock. “Given TTWO’s history of inconsistent performance and execution, we would view the proposed management change (which we believe is likely) as a positive for the company, assuming key development personnel are retained,” he wrote in a research note.

Citigroup’s Elizabeth Osur is more skeptical, and retains her Sell rating and $14.50 target price. Osur writes that “this activist step is long overdue,” but worries that the company’s licensing and royalty arrangements “create structural issues that will not easily be solved by new management.” She also says a management change could lead to the delay or cancellation of new titles, “making EPS forecasts difficult.”

The notes that Jim Cramer was recommending the stock on the tube yesterday, asserting that the shares could rise further, aided by a short position that represents about 35% of the float.

TTWO 1-yr chart

ttwo chart

Source: Take Two Jumps as Board Faces Ouster by Investors, But Can They Fix It?