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Take-Two Interactive (NASDAQ:TTWO) dropped 1.5% on Thursday before the market open amid a downgrade from Bank of America amid worries about timing for Grand Theft Auto VI.
The bank dropped its rating to Neutral from Buy with a $170 price target on the assumption that Grand Theft Auto VI won't launch until closer to the end of 2025, among other reasons.
Current earnings estimates for the video game company assume the game will hit the market in March of 2025, analysts Omar Dessouky and Arthur Chu wrote in a note. Those estimates are likely to tumble 20% before August as Bank of America assumes release will be later than expected. Not all investors are likely to have enough patience to wait, the bank said.
The analysts also noted that there's not enough known about the quality of the upcoming game based on the recently-released trailer and footage that leaked last year.
Downside risk will be limited as more investors pile in ahead of the launch, "but we do not see significant further upside potential for now," The analysts said.
On Wednesday, Morgan Stanley called the upcoming game the "most important event" Take-Two Interactive (TTWO) has seen in a decade. The company released a trailer for the game this week, with a release date of 2025, later than expectations that it would come out in 2024.
Take-Two's (TTWO) label Rockstar has a history of delaying launch dates, BofA said, noting that Red Dead Redemption 2, its last big release in October 2018, debuted with a trailer in October 2016, which had indicated a fall 2017 launch.
"The GTA 6 debut trailer, while exciting, did not contain elements that convince us that the game is well into alpha testing," Dessouky and Chu said. Moreover, it did not mention a PC version launching in 2025."
The stock has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Seeking Alpha's quant system, which consistently beats the market, rates the stock a BUY.
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