Citi Downgrades THQ Inc (THQI) to Hold

November 6, 2008 10:29 AM EST

Citi downgrades THQ Inc (Nasdaq: THQI) from Buy to Hold. Price target dropped from $15 to $7.

Citi analyst says, "While key games like Saints Row 2 have performed stronger than expected, the remainder of FY09 looks tough as Wall-E continues to underperform, the kids portfolio looks vulnerable this Holiday Season given macro headwinds and two key owned IP games were pushed into FY10 (Red Faction/Darksiders). Absent near-term catalysts we are downgrading shares to Hold. For patient investors THQI could be a compelling FY10 story with its strategy shift towards a more focused portfolio of bigger propositions and the shares look inexpensive trading AH at 0.2x EV/Rev with 54% cash as a % of market cap. The company could regain its momentum in the June quarter (expect Pixar/UFC/Red Faction) however we now believe there's risk Pixar's UP could be a difficult video game adaptation and the kids genre could continue to suffer in FY10 assuming the economy remains tough."

THQ Inc. (THQ) is a worldwide developer and publisher of interactive entertainment software for all game systems, including home video game consoles.

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