• Credit Suisse is mostly bullish on online gaming stocks ahead of Q3 earnings.
• The firm has raised price targets for Activision Blizzard, Inc. (NASDAQ: ATVI), Electronic Arts Inc. (NASDAQ: EA) and Take-Two Interactive Software, Inc. (NASDAQ: TTWO).
• Credit Suisse maintains Overweight ratings on EA and Activision Blizzard and a Neutral rating on Take-Two.

Q3 earnings season is about to kick off for online video game companies Activision Blizzard, Electronic Arts and Take-Two Interactive Software. In a new report, Credit Suisse analyst Stephen Ju gives his take on what shareholders should watch for when these three companies report.

Activision Blizzard
Ju believes the key drivers to the quarter will be Destiny: The Taken King and Skylanders. Credit Suisse has modeled 6.4 million and 5.4 million unit volume for the two games, respectively. Ju is also particularly interested in any updates to Overwatch that could come at the company’s first investor day in quite some time. Credit Suisse maintains its Outperform rating and has raised its price target from $35 to $38.

Electronic Arts
According to Ju, the primary focus in the near-term will be Battlefront units. Credit Suisse’s analysis indicates that every incremental million units sold beyond its 8.0 million forecast will add about $0.06 to the company’s fiscal 2016 EPS. Credit Suisse maintains its Outperform rating on EA and has raised its price target from $87 to $90.

Take-Two
Ju sees Battleborn, which is scheduled for release in February 2016, as the key incremental contributor to fiscal 2016’s story. “Our sensitivity analysis suggests that each incremental million units sold could add ~$0.17 to FY16 EPS,” he explains. Credit Suisse maintains its Neutral rating on Take-Two but has raised its price target from $30 to $35.

Disclosure: the author holds no position in the stocks mentioned.