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Activision inventory worth sees 1984 ranges, file valuation on growth plans

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Activision Blizzard Inc. stocks closed Friday at their highest since 1984, or an all-time high if you factor in multiple stock splits, after strong gains and an outlook aimed at tapping the fast-growing mobile games market more strongly.

Activision Blizzard ATVI, + 9.64% shares, rose more than 12% for the day on Friday to close 9.6% at $ 101.61. This is the first time since January 20, 1984, when the stock closed at $ 103.12 according to FactSet data that Activision’s share price was above $ 100. Taking into account the nine stock splits since then, stocks hit an all-time high with a record market cap of $ 78.53 billion, according to FactSet.

Late Thursday, Activision reported Blizzard quarterly results and an outlook that exceeded Wall Street’s expectations, as well as plans to expand more franchises to mobile devices. The company publishes the popular Call of Duty franchise under its Activision brand, the World of Warcraft franchise under its Blizzard brand, and the Overwatch and Diablo and Candy Crush franchises under its King brand. Activision acquired Blizzard in 2008 through the merger with Vivendi’s games business and King Digital Entertainment in 2016.

In recent years, mobile gaming has been the fastest growing platform in the video game sector, accounting for about half of its revenue of around $ 180 billion in 2020, with PC and console-based games accounting for the other half, according to IDC data.

Of the 34 analysts who cover Activision Blizzard, 28 have buy ratings for the stock, five hold ratings, and one has a sell rating, according to FactSet. Of these, 20 have raised their price targets and, according to FactSet data, raised the average price target for the share from previously USD 92.68 to USD 108.86.

JPMorgan analyst Alexia Quadrani, who has an overweight rating on the stock and raised her target price from $ 101 to $ 115, expects the Call of Duty franchise to become the template for the company’s other stocks.

“Call of Duty” with its titles “Black Ops – Cold War” and “Modern Warfare” not only goes the traditional way of console and PC sales, but the franchise also offers a free “Warzone” battle royale option for free “Fortnite” from Epic Games Inc. with all of these options available on a mobile platform.

“The success at CoD in 2020 has significantly exceeded expectations at the beginning of the year (even considering the pandemic), and we expect ATVI to apply similar business model innovations to other titles and use mobile to increase reach and free-to-use Expand play modes to help players move to premium games, ”said Quadrani.

Stifel analyst Drew Crum, who has a buy rating and a target price of $ 108 on the stock, continued to be positive about possible developments in the company, although he viewed the results as mixed.

“We believe this will (however) be replaced by management’s (positive) comment on ’21 (and beyond), which provides a better context for when the key initiatives will be timing and what will be a potentially massive year in ’22. ” Said Crum.

Andrew Moroc, an analyst at Raymond James, who has an outperform rating and raised his stock price target from $ 109 to $ 120, believes the company “has enough runways to attract new players mobile and free Reach offers and benefit from strong offers Demand for planned new titles in existing franchises. “

UBS analyst Eric Sheridan, who has a buy recommendation and raised his price target from $ 116 to $ 120, said Activision Blizzard had kept the theme for the past 12 months.

The company’s earnings report showed “how the broader industry has benefited from the stay-at-home momentum but has continued to focus on the essentials [long term]”Said Sheridan.

“In the latter case, the industry is poised to be a net shareholder in media consumption, to benefit from a blurring of the boundaries of platform and gaming preferences by a global basis (increasingly mobile first), and to continue to allocate capital for a mix of resources, growth and Shareholders, ”said the UBS analyst.

Brian Fitzgerald, an analyst at Wells Fargo who has an overweight rating and a target price of $ 120, asked on a note, “How big and how profitable can this thing get?”

Last year Activision Blizzard outlined four pillars of its long-term strategic growth: more new releases, better live operations, expansion of popular PC and console games to mobile platforms, and the addition of “new engagement models” such as branching out into urban player leagues and sports .

Fitzgerald said management is “clear that they expect a” gradual change “in financial performance in FY22, and we have no reason to doubt their ability to” call the four pillar growth strategy for other franchises ” of duty “implement.”

Piper Sandler analyst Yung Kim, who has an overweight rating and a price target of USD 120, considered the company’s forecast to be conservative, as the expected launches of the franchise companies “Diablo” and “Overwatch” were not taken into account.

“Activision aims to grow the Call of Duty franchise year-round despite a difficult comparison with the March 20 launch of Call of Duty Warzone, which was also accompanied by the introduction of stay-at-home regulations related to resumes was reinforced -19, “said Kim. “Despite the high expectations, we still suspect a high dose of conservatism.”

Kim said he expected more details from the company’s BlizzConline 2021 show, which begins February 19.

Cowen analyst Doug Creutz, who has a market rating and price target of $ 100, was skeptical about the company’s forecast that two other franchises – likely Diablo and Overwatch – would have annual sales of $ 1 billion Contribute US dollars in addition to “Call of Duty”, “World of Warcraft” and “Candy Crush”.

“This is a pretty bold prediction given the relative lack of such franchises in the marketplace and the obvious recent battles from Blizzard other than WoW,” said Creutz. “Still, we expect most investors to give management the benefit of the doubt (at least for now).”

In the past 12 months, Activision stocks are up 73%, while iShares’ expanded tech software ETF IGV (+ 1.67%) has risen 48%, the S&P 500 index SPX (+ 0, 39%) by 17% and the tech value increased The Nasdaq Composite Index COMP, + 0.57%, increased 46%.

On Tuesday, Electronic Arts Inc. EA shares retreated from a record high of + 1.87% after the video game publisher reported quarterly results that fell short of Wall Street expectations. The TTWO of Take-Two Interactive Software Inc. (+ 2.98%) is to publish its results after the market close on Monday.

EA stock closed 1.9% to $ 141.22 on Friday, rising 31% over the past 12 months, while Take-Two stock closed 3% to $ 207.49 and up over the past 12 months 72% increased.

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