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Pacific Crest Raises Activision Blizzard Target By $2 Amid 'Overwatch' Strength

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On May 24, Activision Blizzard, Inc. (NASDAQ: ATVI) launched the much-awaited, multiplayer first-person shooter game Overwatch. Pacific Crest’s Evan Wilson maintained an Overweight rating for the company, while raising the price target from $41 to $43. The analyst mentioned that the early reviews for the game were strong.

Early signs had already suggested that Overwatch would be a success after its launch, analyst Evan Wilson noted. The initial Metacritic reviews have come in now, with the PC version of Overwatch getting a score of 94 and the PS4/Xbox One score at 90.

eSports Franchise

“Overwatch has wide appeal with its "friendly" gameplay, short 6 to 16 minute game sessions (allowing for ads between sessions) and custom camera angles specifically for eSports. Success in eSports would drive more engagement and provide a longer revenue stream due to ancillary revenue streams like events, merchandise and advertising,” Wilson wrote.

The 2Q estimate has been raised from 5 million units to 7 million units. The EPS estimate for the quarter has been raised from $0.39 to $0.46. 

Comparing To Other Games

The analyst commented that capitalized software associated with Overwatch could be less than COD or Destiny, given only 6-9 months of capitalization of Blizzard titles. Taking Ubisoft's The Division as a benchmark, Wilson said that it sold nearly 5.5 million units in four weeks. He added that Overwatch is likely to sell faster and has six weeks on the market.

Latest Ratings for ATVI

May 2018Bank of AmericaMaintainsBuyBuy
May 2018Credit SuisseMaintainsOutperformOutperform
May 2018JP MorganInitiates Coverage OnNeutral

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Posted-In: Evan Wilson Pacific CrestAnalyst Color Long Ideas Price Target Reiteration Analyst Ratings Trading Ideas


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