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Investing.com -- DA Davidson initiated coverage of major video game stocks in notes Wednesday, assigning a Buy rating to Take-Two Interactive (NASDAQ:TTWO) and a Neutral rating to Electronic Arts (NASDAQ:EA).
The firm is bullish on Take-Two, setting a $250 price target, citing a "busy CY’25" release slate and strong intellectual property.
"We believe that TTWO can achieve record Net Bookings in the coming years (FY’26 and FY’27) as it releases some of its highly anticipated titles," including Grand Theft Auto 6, Borderlands 4, and Mafia: The Old Country, said the firm.
The launch of GTA 6 is expected to be a major catalyst, with DA Davidson estimating it could generate "$3.8B-$4.1B in Net Bookings in the twelve months following release."
Take-Two’s stock historically sees strong momentum ahead of Rockstar title launches, with past trends showing "an average of 80% increase from title announcement to title release."
The firm also highlighted Take-Two’s reputation among developers and players, which it believes contributes to strong retention and long-term engagement.
However, DA Davidson noted potential challenges, including "sales cannibalization or delays" from the packed release schedule, which could pressure shares in the near term.
Any pullback in Take-Two’s stock due to such concerns "may be an opportunity to add shares" ahead of GTA 6’s launch.
For Electronic Arts, DA Davidson is more cautious, issuing a Neutral rating with a $140 price target.
While the firm acknowledged EA’s "excellent portfolio of IP" and strong presence in the sports gaming market, it cited "significant pressure" on upcoming projects to offset execution challenges, particularly in non-sports franchises.
The firm also pointed to EA’s valuation, noting it "trades at a discount to peers" due to competitive pressures and recent missteps.