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The analyst downgraded the stock to Underperform on “underwhelming” guidance and valuation. Thomison believes 2017 will be a “down year” for the company’s top and bottom line.
Quarter In Review
Activision Blizzard reported quarterly EPS of $0.92, ahead of the Street’s $0.73 estimate, with "Overwatch" become the quickest Blizzard title to gain over 25 million registered players.
However, for the first quarter, the company expects revenue of $1.05 billion and EPS of $0.18. The outlook missed the Street consensus of $1.2 billion and $0.31.
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Also, Activision introduced 2017 full-year revenue guidance of $6.3 billion and EPS of $1.85. This guidance is also below the prior Street consensus of $6.68 billion in sales and EPS of $2.03.
Analyst's Commentary
“While we feel this guidance is conservative, we also believe it reflects maturation of certain console franchises,” Thomison wrote in a note.
The analyst also cut his 2017 EPS/revenue view to $1.92/$6.33 billion from prior estimate of $2.20/$7.2 billion.
Meanwhile, Thomison recommends investors to take some profits, given the 18 percent rally in the last one month.
Related Link: For Activision Blizzard, 'Overwatch' And 'Candy Crush' Strength Outweighs 'Call Of Duty' Weakness
The analyst noted that the recent share gains and his lowered profit outlook for the coming year have resulted in a significantly higher valuation versus recent levels.
“In sum, we believe 2017 is shaping up to be a down year for ATVI’s revenues and earnings, while the stock price is at an all-time high and valuation is near the upper end of a historical range. Given that 2018 prospects seem considerably more attractive, we believe better investment opportunities could surface later this year,” Thomison added.
At last check, shares of Activision fell 3.42 percent to $45.62.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.