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Wedbush Remains Bullish On Activision Blizzard Ahead Of Q4 Print

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Michael Pachter of Wedbush on Monday commented in a note that Activision Blizzard, Inc. (NASDAQ: ATVI) will report above consensus fourth-quarter results on Thursday, driven by "Call of Duty: Advanced Warfare" and "World of Warcraft."

Pachter estimates Activision Blizzard will report an earnings per share of $0.91 on revenue of $2.275 billion. This compares favorably to the consensus estimate of earnings per share of $0.88 and revenue of $2.241 billion.

Pachter notes that based on NPD data, the firm's fourth-quarter packaged software sell-through to consumers was down 10 percent year-over-year, below overall sell-in to retailers guidance of down 3 percent. The analyst adds that on the other hand, NPD's SW sales figures do not capture bundle units, digital sales, toy sales, or the bulk of Blizzard sales.

Pachter estimates that the company will benefit from the three million digital downloads of "Call of Duty," three million "Destiny" expansion sales, one million units of "World of Warcraft: Warlords of Draenor," $50 million from "WoW" sub growth and $50 million from "Hearstone." Taken together, these titles should generate $350 million in year-over-year revenue growth that more than offsets the $180 million decline suggested by NPD data.

Looking forward to fiscal 2015, Pachter expects the company's initial guidance to be above the Street's expectations as management may guide to at least flat sales growth with earnings per share growth of 10 percent or more. Moreover, the analyst expects the company to announce within the next three months that it has been actively repurchasing its own shares following the expiration of the Vivendi lockup.

Shares are Outperform rated with a $31 price target.

Latest Ratings for ATVI

DateFirmActionFromTo
Sep 2019MaintainsBuy
Sep 2019UpgradesNeutralBuy
Sep 2019MaintainsBuy

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Posted-In: Activision Blizzard Blizzard Call of Duty Destiny Hearstone Michael PachterAnalyst Color Analyst Ratings

 

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