THQ (THQI) Price Target Cut to Bone as Survival Questioned

November 6, 2012 11:18 AM EST
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Price: $0.31 --0%

Rating Summary:
    0 Buy, 8 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 22 | Down: 32 | New: 34
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Shares of video game company THQ (Nasdaq: THQI) cratered following the release of the company's 2nd-quarter earnings report yesterday. While earnings were better than expected, news that THQ was delaying release of critical game title South: Stick of Truth, and other titles, sent investors heading for the exits, as a pending cash crunch looms. Currently, THQ is evaluated strategic financing alternatives with Centerview Partners.

THQ's cash balance sheet dropped 50 percent since the beginning of its fiscal 2013 reporting year, and it has already tapped $21 million of its $50 million credit line, noted a report by analyst at MKM partners.

"Given these issues and facing a $100mn convertible senior note that comes due in August 2014 . . . the big question is, can it make it to next year?" said analyst Eric Handler.

THQ has suspended guidance and has withdrawn its prior outlook for FY13, while is searches for a path forward.

In the meantime, MKM cut its fair value estimates on THQ from $6 to $2.50.

"With South Park moving into FY14, we are raising our EPS estimate for the year to $0.58 from ($0.03), although THQ's lack of execution this entire console cycle gives us little confidence in this outlook," said Handler

For an analyst ratings summary and ratings history on THQ Inc. click here. For more ratings news on THQ Inc. click here.

Shares of THQ Inc. closed at $3.02 yesterday.

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