Analyst: THQ Has Promising 2008, Pixar Upside

With THQ expected to release its fiscal fourth quarter financial results on May 6th, Cowen and Company analyst Doug Creutz has kept his firm's "Outperform" rating on THQ stock, based on an expected strong upcoming fiscal year. Creutz projects that Q4 2008, the period that ended March 31, 2008, will be seen as "relatively uneventful" once results are posted, with THQ seeing revenue gains of 16.6 percent year over year to $200.7 million, and a modest loss. Things are expected to get more exciting as the industry moves into "the historically strong May-September period for video game stocks". Creutz notes that Wall Street has a wide range of expectations for THQ stock in fiscal year 2009, and if the company delivers on the higher end of those expectations, stock could "outperform the market by at least 20 percent over the next 12 months." Strong FY09 performance is said to be driven by THQ's attention to Wii titles, investments in owned intellectual property, and continued success of licensed games, particularly adaptations of Pixar animated films. Though the Ratatouille game saw lower sales than the wildly successful Cars, Creutz expects the upcoming Wall-E to break two million units sold, in part because "Wall-E's robot character, like the race cars in 2006's Cars, will be more video game friendly." Other key titles cited in the company's lineup were internal studio Volition's Saints Row 2 and Red Faction: Guerrilla, Vigil Games' debut effort Darksiders: Wrath of War, Blue Tongue and Helixe's de Blob for Wii and DS, and the first title in the newly-licensed Ultimate Fighting Championship franchise. In all, the analyst puts THQ's FY09 lineup markedly above that of FY08, driving a projected year over year revenue improvement of 13.2 percent to $1.18 billion.