Video game maker Take-Two Interactive Software Inc. is in the midst of a transition to digital distribution that gives the company a positive outlook on future growth, according to Benchmark analyst Mike Hickey. After meeting with Take-Two management at the Electronic Entertainment Expo (E3) Hickey wrote in a note: "We believe player migration toward full game download and an elongated high margin sales curve from a proven but still emerging [micro-transactions] model are significant financial long-term performance tail winds." Hickey wrote that Take-Two is in the early days of its transition to delivering games digitally, which is the result of a broader industry trend that has impacted retailers of physical games, such as GameStop Inc. . Hickey reiterated his buy rating on Take-Two's stock and holds an $85 12-month price target, which represents a nearly 15% premium to Friday's close. Hickey, while viewing Take-Two's share risk/reward profile balancing positive, expects valuation to benefit from conservative guidance, continued opportunity in digital sales and related margin expansion as the industry transitions to digital, strong 2019 growth potential with two big name game releases and an emerging eSports opportunity. Shares of Take-Two Interactive Software have gained more than 50% in the year to date and have nearly doubled over the last 12 months. By comparison, the S&P 500 index is up nearly 9% in the year and more than 17% over the prior 12-month period.
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