Market Overview

Wedbush Remains Bullish On Activision Blizzard Despite Poor Guidance


Michael Pachter on Friday commented in a note that he remains positive on Activision Blizzard's (NASDAQ: ATVI) following an in-line fourth quarter results and "well below" expectations for the full year fiscal 2015.

Activision Blizzard guided its fiscal 2015 revenue to $4.4 billion and earnings per share of $1.15, compared to prior consensus estimates of $4.713 billion in revenue and an earnings per share of $1.43. The lower earnings per share guidance includes a $0.05 impact from the game slate and operations, a $0.14 impact due to foreign exchange and an $0.08 impact from the higher tax rate and share count.

"The company has historically been exceedingly conservative with its guidance, and over the last ten years, has consistently beaten the expectations it sets early in the year," Pachter wrote. "This year is no different as far as management conservatism is concerned."

Pachter adds that the company's guidance includes no contribution from "StarCraft II: Legacy of the Void" and no contribution from a yet to be announced title from Activision Publishing. Also, the guidance assumes only "minimal" contribution from "Call of Duty Online", "modest" contribution from "Heroes of the Storm" and "flat" Call of Duty and "Skylanders" revenue.

Pacther believes that the revenue upside to guidance can be as much as $750 million.

Looking forward, the analyst expects the company to announce a launch date for a "StarCraft" expansion and the announcement of a "compelling" new IP during the E3 Expo in June.

Other catalysts include the company becoming active in the market and exercise a "substantial" portion of its share repurchase authorization.

Shares are maintained with an Outperform rating and $31 price target.

Latest Ratings for ATVI

Jan 2021Deutsche BankMaintainsBuy
Oct 2020KeyBancMaintainsOverweight
Oct 2020BMO CapitalDowngradesOutperformMarket Perform

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Posted-In: Activision Blizzard Activision Publishing Call of Duty Michael Pachter video gamesAnalyst Color Analyst Ratings

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