In a note titled “Back to the Future,” MoffettNathanson analyst Clay Griffin said Take-Two’s stock had a “dreadful year” in 2022 as the “market didn’t much care for” its acquisition of Zynga Inc., followed by cuts to its outlook during the year.

Take-Two shares dropped 41.4% in 2022, while shares of Activision Blizzard Inc.
ATVI,
+1.34%
— buoyed by the yet-to-be-closed and contentious acquisition by Microsoft Corp.
MSFT,
+0.06%
— rose 15.1%, and Electronic Arts Inc.
EA,
-0.21%
shares declined 7.4%. The S&P 500 index
SPX,
+0.25%
fell 19.4%.

Griffin upgraded Take-Two to outperform from market perform and set a $140 price target to “get ahead of a long-awaited content cycle,” which he likened to “back to the future,” where the publisher’s announcement of big titles in the future will drive the stock higher. Yet he recognizes that investors have heard this before.

“We get it,” Griffin said. “Take-Two has been bragging about its pipeline for years; even as far back as the launch of its last great IP, Red Dead Redemption II (2018). Investor frustration has been palpable of late.”

That gap, however, may be telling, the analyst said.

Read more: Take-Two stock sinks as analysts walk off mobile weakness, focus on pipeline

“More time passed means more development, and with capitalized software on the balance sheet surging to nearly $1B, it’s only reasonable to think major announcements are right around the corner,” Griffin said, noting that with the current generation of consoles from Sony Group Corp.
6758,
-0.26%
SONY,
+1.66%
and Microsoft, gamers are “desperate” for blockbusters to push their new hardware to the limits.

“If past is prologue, when Take-Two sets up its haymakers, they land,” Griffin said. “Mere announcement(s) could propel the shares.”

The most anticipated title from Take-Two is the next installment in the “Grand Theft Auto” series, after the last installment grew to become the most lucrative videogame in history, and continues to rake in cash. Take-Two subsidiary Rockstar Games officially confirmed active development of the game nearly a year ago, leading analysts to speculate it will appear in the company’s 2024 fiscal year, which begins in April.

Also read: ‘Grand Theft Auto’ hack showed just how profitable ‘GTA6’ could be, analyst says

Griffin wrote that GTA VI “is surely coming,” and that it will “likely set a new bar for launch and year-1 sales.”

“How ‘GTA:Online’ evolves and whether or not the entire franchise strategy moves towards an always on, subscription strategy, could change the shape of revenue, but put simply, ‘GTA VI’ is perhaps the most anticipated videogame ever,” he wrote.

Other titles the analyst is expecting to see include new installments in the “Bioshock” and “Mafia” series. Further out would be a “Red Dead Redemption III,” with “a flurry of mid-core titles, mobile entries and independent games” in between.

“Some, of course, will look more like ‘The Quarry’ or ‘Tiny Tina’s Wonderlands,’ i.e., good, quality content but certainly not in the blockbuster category,” he wrote. “Across both F’24 and F’25 though, we feel it is inevitable that the market will soon get more clarity about the biggest Take-Two IP: ‘Grand Theft Auto,’ ‘Bioshock,’ ‘Mafia,’ or even plans for the future of the ‘Red Dead Redemption’ franchise.”

He also pointed out that Take-Two shares have taken off in the past after the announcement of blockbuster titles, not necessarily after they are released.

“Bottom line: you want to own this stock in the build-up to major launches,” he wrote.

Take-Two shares have already climbed 10% in 2023, while EA’s have gained 5.8%, Activision Blizzard shares are running flat, and the S&P 500 has gained 6.3%.