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Activision E3 Takeaways According To Barclays

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The most significant announcement at this week’s Electronic Entertainment Expo [E3], an annual trade fair for the videogame industry, was Xbox’s planned release of a new console in 2017, shortening the console cycle by half to merely 4 years, Barclays’ Christopher D. Merwin said in a report.

Although Sony did not follow suit at the E3 conference, it is likely to announce a new console for next year in the near term, analyst Christopher Merwin commented.

Implications

The announcement suggested that the hardware cycle would become increasingly less relevant for game publishers, which would reduce the cyclicality of the business.

Merwin added, “Apart from the cycle, both the hardware and software providers seemed focused on driving further improvements in engagement, through cross platform play (across PC, console, and eventually mobile), social features in gameplay, and eSports.” With improvements in player engagement, there is likely to be an increase in monetization.

This has positive implications for Activision Blizzard, Inc. (NASDAQ: ATVI), the analyst mentioned. He added that Overwatch now had 10M players, and raised the EPS estimate for 2016 from $1.90 to $2.00 and the price target from $38 to $42.

Although the FPS [first person shooter] category is likely to be “particularly competitive” this year, “we believe the success of Overwatch and strong engagement from Black Ops carrying over should mitigate the risk for ATVI,” Merwin added.

Latest Ratings for ATVI

DateFirmActionFromTo
Oct 2019MaintainsNeutral
Oct 2019MaintainsOverweight
Oct 2019MaintainsBuy

View More Analyst Ratings for ATVI
View the Latest Analyst Ratings

Posted-In: Barclays Christopher D. MerwinAnalyst Color Long Ideas Price Target Reiteration Analyst Ratings Trading Ideas

 

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