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Research Alert: CFRA Lowers Opinion On Shares Of Activision Blizzard To Buy From Strong Buy

· 02/07/2021 18:19

11:15 PM EST, 02/07/2021 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

We lower our rating to Buy from Strong Buy but raise our target by $8 to $117 due to: 1) impressive Q4 '20 results, with revenue up 46% Y/Y, fueled by much higher player engagement from continued sheltering-at-home and by the next-gen consoles that began shipping before the holidays; 2) higher guidance than expected, implying a 2% Y/Y growth for '21, which was supposed to be a flat-to-down year; 3) moderating valuation at a PEG of 2.0x, closer now to its 1-year mean of 2.2x and up from 1.6x when we upgraded to Strong Buy at $79 on November 9, 2020; 4) solid balance sheet with $5.2B in net cash and a 15% higher dividend presently yielding 0.5%. Our $117 target is the product of our '22 EPS forecast of $4.61, now $0.10 higher, and a 25.4x multiple (3-year mean, +5% given $5.2B in net cash and a 0.5% dividend yield). Revenue grew 46% Y/Y to $1.77B, beating consensus by $71M, while EPS of $0.71 was up $0.39 Y/Y, beating consensus by $0.06. We cut our EPS forecast for '21 to $3.90, and initiate '23's at $5.07.