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Homefront passes "key break-even level"

Analysts raise stock estimate after THQ announces 1m sales, 2.4m shipped units

First person shooter Homefront, which received a mixed critical reception, is already estimated to have passed into profitability for publisher THQ, with two separate analysts raising estimates for the company as a result.

THQ has announced that the game has shipped 2.4 million units to date, with a sell through of more than 1 million across North America, Europe and Asia Pacific markets. The game is currently number one in the UK charts and has become the best-selling console debut of the year so far. In North America the game sold 375,000 units in its first day.

Lazard Capital Markets analyst Colin Sebastian has already calculated that the game has now surpassed its "key break-even level", with the 2.4 million shipment figure being higher than expected. As a result the analyst has increased estimates for the fourth quarter of the year towards the higher end of its guidance range, with expected revenues of $254.8 million.

The firm is maintaining its Hold rating on the company's stock though due to "a cautious industry view and limited visibility into near-term product catalysts."

This success comes despite a largely ambivalent critical response to the game, with THQ's stock dropping by as much as 26 per cent following an early Metacritic score of 72 (now 71).

As a result of the game's success though, analyst Doug Creutz at Cowen and Company has reiterated his belief that the game will achieve a worldwide sell through of more than 2 million units and that THQ remains on track to achieve full year 2011 and 2012 estimates. Creutz also described that stock drop off as "unwarranted" and rated it as Outperform and "inexpensive".

Homefront has been one of the most high profile games on THQ's current schedule, with the company planning both sequels and a movie tie-in based on the game's expected success. In March core games vice president Danny Bilson revealed that the game was the company's most pre-ordered product ever.

"We are very pleased with strong worldwide shipments and sell-through for Homefront, and we continue to fulfil new retail orders for the game across the globe," said Brian Farrell, THQ president and CEO. "Homefront is clearly resonating with gamers and we are certainly pleased with our initial sales results."

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David Jenkins

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