Don't Judge Take-Two By Its Market Cap, This Story's Just Beginning

In a research note published on Thursday, Oppenheimer said Take-Two Interactive Software, Inc. (NASDAQ: TTWO) stock appreciation story is just beginning amid industry tailwinds, multiple franchise refreshes and new content. The firm believes the company is well positioned for top- and bottom-line growth, despite it being the smallest of the three U.S. publicly listed video game publishers.

IP Refreshes, Franchises Help

Analyst Andrew Uerkwitz sees strong near-term growth from multiple refreshes of its top-notch IP portfolio, giving it scope for diversifying away from GTA. The analyst also expects the company to gain revenue consistency as opposed to the lumpy nature of the revenues currently, helped by more regular releases of both franchises and new IP facilitated by internal development capacity and strong cash position.

Related Link: Cowen's Gamescom Takeaways

Margin Expansion

Oppenheimer sees long-term margin expansion, as there is a shift in trend toward game downloads and downloadable content is seeing rapid growth. The firm also believes sales and engagement tailwinds would arise from opportunities in mobile gaming, virtual reality and increasingly popular/high quality indie games.

The revenue lumpiness issue and over-reliance on GTA could be a thing of past, according to the firm, as the company seeks to actively address both. With significant earnings power and $8 net cash/share, the firm believes its price target of $54 for the shares of Take-Two is achievable. The firm has an Outperform rating for the company.

At last check, shares of Take-Two were up 2.20 percent at $43.28.

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