Brean Capital Positive On Activision Blizzard, Sees Return To Growth

Todd Mitchell of Brean Capital reiterated a Buy rating on

on Monday with a price target raised to $26 from a previous $25. Mitchell sees Activision's release slate returning the company to growth in the coming years. Specifically, "Overwatch," a new first person shooter IP has been well received thus far. In addition, the company continues to progress in the development of "Heroes of the Storm" and an upcoming expansion for "StarCraft" and "Hearstone." Shares were up 1.3 percent at $20.93 in the pre-market session. "We believe Blizzard has the strongest lineup since joining Activision,” Mitchell wrote. “With the introduction of new IP and an acceleration of the shift towards a free-to-play business model, we believe there is now visibility for Blizzard to expand its audience-base and return to growth after four years of negative growth.” Mitchell sees Activision maintaining or even increasing its “industry leading level of profitability.” A $26 price target is based on the analyst's 17.5x 2017 free cash flow of $1.3 billion discounted to net present value at 10.7 percent.