TTWO Scores Analyst Bull Note on Growth Prospects

Additional tailwinds could come from a shift in the options pits

Digital Content Manager
Jun 3, 2021 at 10:20 AM
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The shares of Take-Two Interactive Software, Inc (NASDAQ:TTWO) are up 0.9% to trade at $178.50 this morning, after the equity earned an upgrade from Jefferies to "buy" from "hold," as well as a price-target hike to $231 from $185. The brokerage firm noted it is confident in the tech name's medium- and long-term growth, amid a multi-year content buildup that will come to fruition over the next few years. Plus, the company just said yesterday that it acquired privately held mobile games developer Nordeus for roughly $378 million.

The equity has experienced some volatility since surging to a Feb. 8, all-time high of $214.91. Shares have since been struggling with overhead pressure at the $189 level, since a bounce off the 320-day moving average in May. However, the 60-day moving average has contained the security's latest pullback, and TTWO remains up 36.8% year-over-year.

Analysts were already mostly optimistic the equity coming into today, with 12 of the 19 in question carrying a "buy" or better rating, while the remaining seven said "hold" or worse. Plus, the 12-month consensus target price of $221.58 is already a whopping 23.9% premium to current levels.

Additional tailwinds could come from a shift in the options pits, which have been more bearish than usual. This is per TTWO's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands in the 84th percentile of its annual range, indicating long puts are being picked up at a quicker-than-normal clip. 

What's more, TTWO sports attractively priced premiums at the moment. The equity's Schaeffer's Volatility Index (SVI) of 26% sits in the extremely low fifth percentile of its 12-month range, indicating option players are pricing in low volatility expectations. 

Lastly, the security's Schaeffer's Volatility Scorecard (SVS) ranks at 80 out of 100, implying the stock tends to outperform these volatility expectations -- a boon for option buyers.

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