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Activision Blizzarrd Repositioning as Game Franchises Age, Responding to New Player Trends, Oppenheimer Says

· 02/05/2021 10:31

03:21 PM EST, 02/05/2021 (MT Newswires) -- Activision Blizzard (ATVI) is successfully repositioning itself as its videogame franchises age and it responds to trends in engaging new players and monetizing its assets, Oppenheimer said Friday.

The firm raised its price target on Activision Blizzard to $110 from $95 and maintained its outperform rating a day after the company issued full-year 2021 earnings guidance that was under expectations after its fourth-quarter results topped views.

Activision shares were 9.4% higher in afternoon trading.

Analysts Andrew Uerkwitz, Martin Yang and Angie Song said the earnings beat for the December quarter came despite the no new game from Activision Blizzard.

"We believe Activision Blizzard has entered a transition period to reposition its studio assets and development talents in response to aging franchises and new player engagement and monetization trends," they analysts said, pointing to its "successful turnaround for its core franchise, 'Call of Duty.'"

Revenue is pegged at $8.23 billion this year, below the $8.49 billion consensus of analysts polled by Capital IQ and the $8.42 billion for 2020, the Santa Monica, California-based company said late Thursday. Per-share earnings are seen at $2.83, below the Street's view for $3.15 but ahead of $2.82 last year.

"Considering managements' typical conservatism and the likely [Overwatch 2 online game] inclusion in Street consensus estimates, 2021 guidance is impressive however one dissects it," Oppenheimer said.

The analysts said they see momentum in "Call of Duty" titles "Modern Warfare," "Mobile," and "Warzone," and they "will offer material near-term upside and result in multiple expansion longer term as investors regain confidence in ATVI's ability to innovate, protect its core franchises, and grow its audience across platforms."

Activision on Thursday said EPS in the fourth quarter was $0.65, down from $0.68 a year earlier, while revenue rose to $2.41 billion from $1.99 billion. The Street had expected EPS of $0.57. Net bookings were $3.05 billion, above analysts' views for $2.8 billion.

"As Activision's 'Call of Duty,' 'Candy Crush,' and 'World of Warcraft' mega franchises continue to draw and delight hundreds of millions of gamers through a combination of free-to-play and premium content strategies, we expect the company to continue delivering outsized revenues and profits, especially as shelter-in-place largely continues for the next several months," said Wedbush analyst Michael Pachter.

Price: 101.93, Change: +9.25, Percent Change: +9.98