Photograph by Charley Gallay/Getty Images for Activision
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Shares of videogame software publisher
Activision Blizzard
rose Tuesday after a bullish analyst said games from across the company’s brands could boost earnings.
Activision stock (ATVI) was recently up 4.3% to $44.11 as Goldman Sachs analyst Michael Ng upgraded the shares to Buy from Neutral, adding the company to its America’s Conviction List.
Ng boosted his price target on Activision’s shares by $4 to $54, just above FactSet’s average near $53.
“With the stock down 13% since the beginning of May, underperforming the
S&P 500
and videogame peers on disappointing first-quarter results and concerns about Call of Duty 2020, we view this as an attractive entry point for a stock that, in our view, is on the cusp of an earnings inflection,” he wrote. Those peers include
EA
(EA) and
Take-Two Interactive Software
(TTWO).
Ng boosted his 2020 and 2021 earnings-per-share estimates, setting them at $2.72 and $2.98, respectively, both higher than the current FactSet consensus. His new 2019 estimate, $2.11, is below consensus.
In his note, Ng counted two high-profile game brands—Call of Duty and Overwatch—among his reasons for optimism about the strength of Activision’s coming games, but those were only some of the reasons he gave: He also cited a coming mobile Diablo installment, as well as updates to Hearthstone and World of Warcraft that could lift engagement.
“We expect an engagement inflection for Blizzard’s key franchises following an acceleration of content releases in the second quarter and beyond,” he wrote. (The company’s Blizzard division makes the WoW, Diablo, Overwatch, and Hearthstone games, among others.)
Email David Marino-Nachison at david.marino-nachison@barrons.com. Follow him at @marinonachison and follow Barron’s Next at @barronsnext.
