Mega-Call: Stifel Updates Activision Game Model, Sees More High Margin Projects Than At Any Point In History

Stifel’s Drew E. Crum believes that Activision Blizzard, Inc.’s ATVI has more initiatives lined up than at any other point in its operating history, which the market is not fully appreciating at this time.

The analyst maintained a Buy rating on the company, while raising the price target from $35 to $40.

Overwatch

A detailed review of Stifel’s gaming model and keeping Activision Blizzard’s current and upcoming initiatives in mind, Crum expressed optimism regarding Overwatch, which is scheduled for release on May 24.

This game would “contribute to what we are forecasting as a record year for Blizzard, while further diversifying the portfolio,” Crum mentioned.

Call of Duty

The analyst also noted that digital trends for Call of Duty suggest that engagement will be an incrementally important metric for the franchise, although the market tends to focus more on units sold.

King

For the King transaction, Crum believes that expectations of $0.40 accretion could prove conservative, with advertising emerging as a potential opportunity in the intermediate term.

Destiny

However, the analyst also expressed concern regarding the Destiny franchise, while stating that the concerns might dissipate with the sequel coming into focus in 2H17.

The non-GAAP EPS estimate for 2017 has been raised from $2.20 to $2.32.