"Game On" is The Fly's weekly recap of the stories powering up or beating down video game stocks.
CYBERPUNK: After CD Projekt's (OTGLY) latest game "Cyberpunk 2077" released earlier this month with numerous technical issues and defects in the Xbox One (MSFT) and PlayStation 4 (SNE), the publisher issued a statement apologizing for the poor performance of the games and that any purchasers could receive a refund for their games, though no statements on the matter had yet been made by any digital or online retailers. Meanwhile, people who bought 'Cyberpunk' on PS4 were having difficulty getting refunds, as Sony has a strict refund policy in place and the game did not meet its criteria. However, Sony said on Thursday night that it will not only offer a full refund for everyone who purchased the game and announced that the game would be removed from the PlayStation Store "until further notice." While Microsoft (MSFT) did not take the game off its online storefront, the company did say that it would expand its existing refund policy to offer full refunds to anyone who bought "Cyberpunk 2077" from the Microsoft Store "until further notice."
On the physical side, Best Buy (BBY) also said in a forum post late last week that it will allow returns for select opened physical copies of the game through December 21, 2020. Beyond that date, the retailer will return to its normal Return & Exchange promise for the game, which does not allow for returns of opened game software, the company said. Additionally, Kotaku's Ian Walker reported that GameStop (GME) has told its employees that it is fully refunding customers who purchased "Cyberpunk 2077" from its stores, adding that it will accept returns of physical copies even if the unit has been opened. The retailer will also label the games as "Defective" before shipping them back to the GameStop warehouse, according to Kotaku.
JPMORGAN: Last Wednesday, JPMorgan Alexia Quadrani downgraded Electronic Arts (EA) to Neutral from Overweight with an unchanged price target of $155, saying the company has a "relatively weaker track record of execution" versus peers, which is a reason why the shares continue to trade at a slight discount to Activision Blizzard (ATVI). The analyst also raised her price target on Activision Blizzard to $101 from $95, saying the publisher remains her top console/PC pick. Additionally, Quadrani initiated coverage of Take-Two (TTWO) with a Neutral rating and $210 price target, saying that while the company has one of the best track records of creating must-have games, the stock also trades at a "substantial premium" to its closest peers Activision Blizzard and Electronic Arts. The analyst added that she is looking for a more compelling entry point or more visibility into the pipeline to become more positive on Take-Two shares.
BMO/MS ON TTWO: Meanwhile, two analysts have raised their price targets on Take-Two this week. BMO Capital's Gerrick Johnson raised his target to $225 from $200 and maintained an Outperform rating on the shares, saying he believes "Grand Theft Auto Online" and "Red Dead Redemption" will be the primary beneficiaries of the botched "CyberPunk 2077" launch. Additionally, Morgan Stanley analyst Brian Nowak upped his firm's target on Take-Two to $215 from $200 and kept an Overweight rating on the shares. The firm's work shows 2020 likely pulled forward about four years of video game user growth, said Nowak and peer Matthew Cost, who think it will be increasingly important for publishers to keep their content fresh to "keep these players and their wallets as the real world reopens."
