Activision Blizzard's Strong eSports Performance Pushes Morgan Stanley To $100 Bull Case
Activision Blizzard, Inc. (NASDAQ: ATVI) has huge potential ahead, thanks to faster-than-expected growth in eSports and continuing momentum.
The Analyst
Morgan Stanley analysts led by Brian Nowak maintained an Overweight rating and $75 price target for the stock, but pushed a sum of the parts bull case up to $100.
The Thesis
Far and away the biggest factor driving Nowak’s new bull case is Activision’s Overwatch League. Audiences are two times bigger than the analyst had projected, and gains in licensing, events and merchandise could see Overwatch League revenue coming in 1.4 times higher.
With an estimated 50 percent of gamers watching eSports at an average viewing time of 1 hour per day, the analyst sees Activision continuing to exceed audience expectations.
Nowak also expects the company to launch an eSports league for the popular "Call of Duty" franchise starting in 2019. "Call of Duty’s" player base is approximately twice as large as "Overwatch’s" and could generate $105 million in 2020.
The third factor driving the now bull case is a projected $17 million of gambling revenue in 2020, thanks to the recent U.S. Supreme Court decision allowing states to legalize sports betting. 30 percent of viewers could wager as much as $20-40 each annually.
Price Action
Shares of Activision were trading up 1.5 percent at $71.23 Wednesday morning.
Related Links:
Mike Olson's Bullish Musings On Activision, Amazon And Netflix
Activision Blizzard In A Battle Royale Of Its Own Against 'Fortnite'
"Overwatch" screenshot from Wikimedia.
Latest Ratings for ATVI
Date | Firm | Action | From | To |
---|---|---|---|---|
Jan 2021 | Deutsche Bank | Maintains | Buy | |
Oct 2020 | KeyBanc | Maintains | Overweight | |
Oct 2020 | BMO Capital | Downgrades | Outperform | Market Perform |
View More Analyst Ratings for ATVI
View the Latest Analyst Ratings
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