THQ Inc. Hits 52-Week High On
Better-Than-Expected 4Q Earns
Dow Jones Newswires
NEW YORK -- THQ Inc.'s (THQI) shares soared to a second
consecutive 52-week high Wednesday after the company announced
fourth-quarter earnings that beat analysts' expectations by 36 cents a
share.
After the close of the market Tuesday, the Calabasas, Calif. interactive
entertainment software publisher reported fourth quarter net income of
84 cents a diluted share, compared with 19 cents a diluted share a year
earlier. The average estimate, according to a First Call Corp. survey of
four analysts, was 48 cents.
Furman Selz LLC analyst Stewart Halpern said the company, which
consistently beats expectations, got a double boost in the latest quarter:
strong performances by its game titles and a lower-than-expected tax
rate of 19.2%. But even if the tax rate had been the anticipated 30%,
Halpern added, THQ's fourth-quarter per-share earnings would have
been in the mid-60-cents range, significantly beyond analysts'
expectations.
One reason THQ consistently beats expectations is that it's conservative
with its earnings forecasts. "The way they forecast their business is
based on what they believe they can definitely achieve. They try not to
let expectations get out of line," Halpern said.
"We are not going to say we are going to make a home run on every
title," said Deborah Lake, THQ's director of investor relations. "A lot of
things fell exactly in our favor (during the quarter)." She said market
conditions were excellent, especially during the holiday season; titles
that did very well include "WCW vs. NWO: World Tour" for the
Nintendo 64 and "The Lost World" for Nintendo GameBoy.
Halpern said THQ is analogous to a movie studio, and so has
unexpected hits and misses.
"You know that a movie with Tom Cruise or a sequel to 'Lethal
Weapon' or 'Jurassic Park' will do well," Halpern said "But there are
always unexpected phenomena like the 'Full Monty."'
THQ plans to release 30 or more game titles in 1998, Lake said. The
company released 34 new games in 1997, including 12 in the fourth
quarter.
Halpern, who rates THQ's stock at strong buy, said he raised 1998
estimates to $1.56 from $1.16 and the 12-month share price target to 38
from 25.
THQ's Nasdaq-traded shares were recently at 28 1/2, up 4 1/2, or
18.8%, on volume of 1.8 million, more than 11 times the daily average
of 155,200. They were earlier as high as 29 1/8; the previous 52-week
high, 24 3/4, was set Tuesday. |
