Activision Could be a Buying Opportunity, Says Goldman Sachs

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Activision

One of the world’s best-known videogame publishing companies has caught something of a second wind today after Goldman Sachs gave the company a recommendation. Activision-Blizzard saw its shares surge on Tuesday after earning a bullish recommendation from one analyst.

Goldman Sachs analyst Michael Ng upgraded Activision’s stock from a “neutral” to a “buy” while elevating the stock to the firm’s conviction list. He also boosted his target price for the company by $4 to $54 per share, which is just above the average consensus near $53.

“With the stock down 13% since the beginning of May, under performing the S&P 500 and videogame peers on disappointing first-quarter results and concerns about Call of Duty 2020, we view this as an attractive entry point for a stock that, in our view, is on the cusp of an earnings inflection,” he said. “We expect an engagement inflection for Blizzard’s key franchises following an acceleration of content releases in the second quarter and beyond.”



The analyst went on to say that two of Activision-Blizzard’s most high-profile games, Call of Duty and Overwatch, were still well positioned to grow in the years to come. The coming Diablo game being developed on mobile was also something he had positive expectations for.

While fans of the gaming company booed when the announcement was first made that the series would be having a mobile installation, it’s speculated that this move is meant mainly to cater to the Chinese market, which is one of the largest consumers of mobile games.

At the same time, he went on to add that Blizzard’s most iconic game, World of Warcraft, could see a significant increase in subscribers with the launch of its signature classic version.

It is widely accepted that subscription numbers to the retail version of World of Warcraft have been falling over the past few years despite the best attempts from Blizzard. Classic is expected to rectify some of this decline, as potentially millions of former subscribers who have been playing on private, illegal servers are expected to return to the game if only to try it out again.

So far, around 16 analysts have a “strong buy” rating on the stock, while two have “buy” and six have a “hold” rating, according to NASDAQ.com. Despite the company’s declining stock price over the past year, not a single analyst has a poor rating for the stock.

Shares of Activision-Blizzard rose as much as 5 percent in Tuesday’s trading session before ending the day up around 3 percent overall. Over the past year, shares of the company have plummeted, dropping from around $80 to their current level around $43.5 per share.

Activision Blizzard Company Profile

Activision Blizzard was formed in 2008 by the merger of Activision, one of the largest console video game publishers, and Blizzard, one of largest PC video game publishers. The combined firm remains one of the world’s largest video game publishers.

Activision’s impressive franchise portfolio includes World of Warcraft, which boasts more than $8 billion of lifetime sales, and Call of Duty, which has sold over 175 million copies across 14 titles over 12 years. – Warrior Trading News

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