What To Expect From Activision Blizzard, EA Earnings

Over the next couple of weeks, Activision Blizzard, Inc. ATVI and Electronic Arts Inc. EA will report quarterly results. Ahead of the events, Piper Jaffray analysts Michael J. Olson and Yung Kim previewed the figures and anticipate in-line quarters for both companies.

Activision Blizzard

Activision is scheduled to report its second quarter results on August 4, and the firm expects them to come in in-line with estimates, even in spite of a June quarter NPD sales decline of 19 percent year-over-year.

Management guided a 1 percent year-over-year decline in total revenue; Piper Jaffray is modeling the Activision segment to surge 7 percent, and Blizzard to tumble 7 percent.

The analysts believe Blizzard will plummet on the back of a difficult comparison ("Diablo III" expansion) to last year: "While Activision NPD is down y/y, we remain comfortable with our estimate due to contribution of digital revenue from DLC for both Destiny and CoD: Advanced Warfare not accounted for by NPD."

Related Link: MKM Analyst Likes Activision, Take-Two & EA After E3

The analysts have also adjusted their estimates modestly for a launch of "StarCraft: Legacy of the Void," late this year. They now project EPS of $1.25 for fiscal 2015, on sales of $4.47 billion, in-line with the Street’s consensus of $1.24 and $4.48 billion.

Piper Jaffray maintains an Overweight rating and $27.00 price target on Activision Blizzard.

Electronic Arts

EA will announce its first quarter (fiscal 2016) financial results on Thursday, July 30. Its first-quarter NPD sales fell 57 percent year-over-year, mainly on the back of a tough FIFA comparison. However, the analysts expect in-line results driven by a surge in digital revenue.

Management guided to breakeven EPS on sales of $640 million (down 17 percent year-over-year), but the Street is projecting earnings of $0.03 per share on revenue of $652 million.

Despite the tumble in NPD sales this quarter, NPD data is showing that the “steep decline in FIFA 15 vs. FIFA 14 is limited to U.S. brick and mortar retail.” The analysts anticipate a less significant FIFA decline in Europe, as well as robust digital revenue from FIFA Ultimate Team.

Related Link: Star Wars Battlefront Sales Outlook 'Increasing' On YouTube Data

The firm does not anticipate a modification in fiscal 2016 guidance for EPS of $2.75 on sales of $4.4 billion, “with comps easing in 2H2016 and launch of Star Wars Battlefront in November; our gamer survey and analysis of YouTube trailer views shows a high level of anticipation for this title.”

Piper Jaffray also maintains an Overweight rating on EA, setting a $79.00 price target.