Market Overview

Goldman Sees Opportunity In Activision After Gaming Stock Sell-Off

Goldman Sees Opportunity In Activision After Gaming Stock Sell-Off
Related ATVI
Out With The Old, In With The New: Telecom Sector To Become Communications Services Sector
Activision Blizzard's Strong eSports Performance Pushes Morgan Stanley To $100 Bull Case
Tracking Stephen Mandel's Lone Pine Capital Portfolio - Q1 2018 Update (Seeking Alpha)

Activision Blizzard, Inc. (NASDAQ: ATVI) reported better-than-expected earnings Nov. 2 and raised its full-year guidance.

The Analyst

Goldman Sachs' Christopher Merwin upgraded the stock from Neutral to Buy and raised the price target from $67 to $73.

The Thesis

Merwin sees the stock as a high-class asset that trades with a discount to peers ahead of a period of accelerating earnings growth that he projects will occur over the next two to three years. (See Merwin's track record here.) 

Goldman raised its EPS estimate for Activision on the basis of potential sequels for games such as "Diablo" and "Overwatch" and the expectation of a Blizzard mobile game, Merwin said. 

The release of the "Diablo" sequel is expected in 2019, and Merwin estimates that 15 million units will be sold. "Overwatch 2" is expected in 2020, he said. Goldman's 2019 and 2020 estimates are now above Wall Street consensus at 4.5 percent and 9 percent, respectively.

The Price Action

Activision Blizzard traded around 2 percent higher Tuesday. It recently pulled back from its 52-week high of $67.03, but rebounded after hitting $57.29 and closed Tuesday at $64.37. 

Related Links:

Mobile Monetization Makes Its Mark In Activision's Q3 Beat

February Digital Gaming Round-Up: Activision's Blues, EA Titles On Top, Ubisoft Makes A Splash

Photo courtesy of Activision. 

Latest Ratings for ATVI

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

View More Analyst Ratings for ATVI
View the Latest Analyst Ratings

Posted-In: Christopher Merwin Goldman SachsAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (ATVI)

View Comments and Join the Discussion!