Wedbush Remains Bullish On Activision Blizzard Despite Poor Guidance

Michael Pachter on Friday commented in a note that he remains positive on

following an in-line fourth quarter results and "well below" expectations for the full year fiscal 2015. Activision Blizzard guided its fiscal 2015 revenue to $4.4 billion and earnings per share of $1.15, compared to prior consensus estimates of $4.713 billion in revenue and an earnings per share of $1.43. The lower earnings per share guidance includes a five cent impact from the game slate and operations, a 14 cent impact due to foreign exchange and an eight cent impact from the higher tax rate and share count. "The company has historically been exceedingly conservative with its guidance, and over the last ten years, has consistently beaten the expectations it sets early in the year," Pachter wrote. "This year is no different as far as management conservatism is concerned." Pachter adds that the company's guidance includes no contribution from

and no contribution from a yet to be announced title from Activision Publishing. Also, the guidance assumes only "minimal" contribution from

, "modest" contribution from

and "flat"

and

revenue. Pacther believes that the revenue upside to guidance can be as much as $750 million. Looking forward, the analyst expects the company to announce a launch date for a

expansion and the announcement of a "compelling" new IP during the E3 Expo in June. Other catalysts include the company becoming active in the market and exercise a "substantial" portion of its share repurchase authorization. Shares are maintained with an Outperform rating and $31 price target.