Brean Capital Sees Near-Term Competitive Concerns for Activision Blizzard

In a report published Friday, Brean Capital analyst Todd Mitchell reiterated a Buy rating and $22.00 price target on

. In the report, Brean Capital noted, “Shares of ATVI could take a pause on near-term competitive concerns. The weekend launch of the new MMO The Elder Scrolls Online could pose near-term concerns for Activision's World of Warcraft, testing both WOW's staying power and the subscription-based model for MMOs. Combined with muted expectations for Activision's Diablo III expansion, year-over-year declines in Call of Duty catalogue sales, and the company's decision to not give visibility to the next iteration of Skylanders at the New York Toy Fair, this could put near-term pressure on shares of ATVI. However, we believe it is hard to bet against Activision and look for a back-ended year to meet full-year guidance for $4.6 billion in revenue and non-GAAP EPS of $1.27. We expect a strong showing at E3 in June, where we expect to see the next installments of Skylanders and Call of Duty as well as a polished Destiny. We also look for a BlizzCon in the fall to feature World of Warcraft expansion Warlords of Draenor as well as virtual card game Hearthstone and Heroes of the Storm. As a result, we maintain our Buy rating and $22 price target on shares of ATVI.” Activision Blizzard closed on Thursday at $20.25.