Activision Blizzard, Inc. (NASDAQ: ATVI) shares were on the rise Friday and analysts reiterated Buy recommendations after the company's strong fourth-quarter report, with sell-side analysts bullish on the company's "loaded pipeline," lean into mobile and pursuit of ad dollars.
The Activision Blizzard Analysts
Needham's Laura Martin kept a Buy rating on the stock and boosted the stock price from $62 to $75.
Wedbush's Michael Pachter reiterated an Outperform rating on the stock and raised the price target from $69 to $76.
Benchmark's Mike Hickey reiterated a Buy rating and $72 price target.
The (NASDAQ: ATVI) Thesis
"The cupboard at Activision is full, and we see great potential for the company’s release pipeline over the next three years," wrote Pachter.
Martin praised Activision's push on mobile games, including "Call of Duty Mobile," where "100 million players added no operating income in the quarter but broadened the top of the funnel."
About a third of Activision's revenue came from its King unit, the Candy Crush developer, and Martin pointed to King's 80% year-over-year advertising growth, which boosted its operating margins 100% year over year as another big positive.
Activision Blizzard could deliver "outsized EPS growth from a strong pipeline and by scaling King ads, accelerating mobile, and making some titles free-to-play," Pachter said, while adding that the stock is on the Wedbush Securities Investment Committee’s Best Ideas List.
One more reason for bullishness from Martin: The Overwatch League is driving new players to the game, which now reaches 50 million players globally. League competitions on YouTube in 2020 should drive increased in-game usage and player exposure, she wrote.
Hickey added that holiday releases of "Call of Duty: Modern Warfare" and the mobile version of the same game exceeded expectations and said the company's forward guidance is too modest.
"We suspect improving investor sentiment, new consoles, existing Live Service portfolio and a compelling game pipeline will drive positive valuation consideration," Hickey said.
ATVI Price Action
Activision Blizzard shares were trading up 2.32% at $61.66 time of publication.