Upgrades ATVI and TTWO From Outperform to Strong Buy Based on Seasonality
MINNEAPOLIS, July 23 /PRNewswire-FirstCall/ -- As a group, video gamesoftware stocks have historically been a good buy in the mid-summer and haveperformed well during the July through November period. Looking to the pasteleven years, this seasonality has proven out eight times (eight years up, twoyears down and one year flat). U.S. Bancorp Piper Jaffray Senior Cable, Mediaand Entertainment Analyst Anthony Gikas believes now is the time to own videogame software names given the historical seasonality of the sector.
"While this seasonality is irrelevant to long-term fundamental buyers,shorter-term traders should take note," said Gikas. "Whether your short-termtrading horizon is weeks or three months, now is seasonally the time to buythese stocks."
Gikas today upgraded Take-Two Interactive Software, Inc. (TTWO, $17.68,#>) to Strong Buy from Outperform and lowered his 12-month price target to$27, based on 13 times his calendar 2003 earnings-per-share (EPS) estimate of$2.05. In addition, Gikas today upgraded Activision, Inc. (ATVI, $24.07, #>)to Strong Buy from Outperform and lowered his 12-month price target to $29,based on 20 times his calendar 2003 EPS estimate of $1.45.
"We are upgrading TTWO and ATVI based on valuation, seasonality and strongnear-term business fundamentals," said Gikas. "Both Take-Take Two andActivision continue to make strong market share gains and their businessfundamentals and visibility remain very strong."
Gikas says that although today's market conditions are unusually volatile,it is reasonable to think that the group can run during the next three-to-fourmonths due to strong company visibility, increasing sales expectations andsector predictability.
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