September 16, 2008

Take Two is a Bargain

The StockMasters points out that since Electronic Arts walked away from their $25 a share offer for Take Two Interactive, shares of Take Two are now under $17 a share. From the article:

"JANCO set a price target on Take-Two of $35 per share (20x EPS estimates), which is a more than 100% premium to today's $16.45 price."

Let's look at a few other factors. Grand Theft Auto IV just became one of the best selling games of all time. According to this article, over 8.5 million copies of the game have been sold so far. GTAIV is still scheduled to be released for the PC this November, which will add to these numbers.

Bioshock is also still scheduled to be released for the PS3 in October. This has proven to be one of the best games of the year for the xBOX 360 and PC. It would not be unreasonable for Take Two to sell 1-2 million copies of the game for the PS3 platform.

On a valuation basis, Take Two now sports a current and forward P/E of under 12. Their PEG ratio is now .6. A price target of the low 30's is not unreasonable for a company that has a lot of growth left.

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