Based on a perceived undervaluing of the company's assets, Prudential Securities analyst Brent Thill upgraded game publisher Take-Two's stock rating from underweight to neutral weight in statements released to investors and the financial press this morning.
The publisher's stock rose 3.65% to $26.43 a share, likely partially as a result of the move, by the end of Thursday's trading, in a day that saw a number of video game stocks, including THQ's, increase in value significantly.
"We believe given more recent evidence of improvements in product quality, the recent resolution with the SEC, and a healthy pipeline of potential hits, the current wide valuation gap vis-à-vis the group is unwarranted," said Thill in a memo to investors. The company recently settled with the Securities and Exchange Commission
over alleged revenue inflation practices.
More importantly, Thill's memo sought to debunk the perception that Take-Two's value (the company includes both the Rockstar and 2K Games publishing labels) was dependent solely on its Grand Theft Auto
series, the next of which will be Grand Theft Auto: Liberty City Stories
for PlayStation Portable.
"Portfolio diversification efforts at TTWO have been considerable," Thill additionally said, referring to Take-Two's new line of sports games, as well as other products from Rockstar such as Midnight Club 3: DUB Edition
and the upcoming Bully
, plus 2K Games titles including Civilization IV