Brean Capital Reiterates Buy Rating, $15 PT on Activision Blizzard

In a report published Friday, Brean Capital reiterated its Buy rating and $15.00 price target on Activision Blizzard ATVI. Brean Capital noted, “Activision faces tough comps and increased uncertainty over 2013 outlook. We think Activision will report modest upside to 4Q12 guidance, but with evidence of aging franchises and tough comps ahead, we anticipate a weak guide for 2013. We look for $2.5 billion in revenue and $0.72 for 4Q12, modestly above consensus. Our estimate assumes a modest decline in Call of Duty sales, and flat revenue and fewer subs at World of Warcraft, with incremental revenue from Skylanders. We believe Activision will also guide to lower revenue and non-GAAP EPS in 2013 than 2012 due to a narrower line-up, tough comps, and launch year investment in Destiny from Bungie. Despite an outlook for lower revenue and EPS, we remain buyers of ATVI because 1) the stock remains cheap even after shrugging off management's signaling of potential downside in 2013, 2) we believe the company is well run and particularly well positioned for transitioning to new emerging models, and 3) we think shares will be supported by the potential for an accretive buy-in of Vivendi's controlling interest in the company. We reiterate our Buy rating and $15 price target.” Activision Blizzard closed on Thursday at $11.35.