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Take-Two (TTWO) Surges 5.2%: Is This an Indication of Further Gains?

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Take-Two Interactive (TTWO - Free Report) shares soared 5.2% in the last trading session to close at $156.06. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 11.5% loss over the past four weeks.

The upswing in Take Two's share price is driven by its pending acquisition of Zynga. The acquisition, once completed, will establish Take-Two Interactive as one of the largest publishers of mobile games in the lucrative and fast-growing industry of interactive entertainment. The deal would unify Take Two’s top-class portfolio of PC and console games and Zynga’s leading mobile franchises.

This publisher of "Grand Theft Auto" and other video games is expected to post quarterly earnings of $1.15 per share in its upcoming report, which represents a year-over-year change of -8%. Revenues are expected to be $879.18 million, up 8% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Take-Two, the consensus EPS estimate for the quarter has been revised 7.3% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on TTWO going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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