Activision Blizzard Inc.’s stock closed on Friday at its highest price since 1984, or at an all-time high when you take into account multiple stock splits, following strong gains and a prospect looking to further explore the growing stock market. games for mobile devices.
Activision Blizzard ATVI,
shares rose more than 12% on Friday, and closed up 9.6% to $ 101.61. It is the first time that Activision’s stock price has ended above $ 100 since January 20, 1984, when the stock closed at $ 103.12, according to data from FactSet. Counting, however, the nine stock splits since then, the shares ended up high, with a record market capitalization of $ 78.53 billion, according to FactSet.
At the end of Thursday, Activision Blizzard released quarterly results and a prospect that exceeded Wall Street expectations, along with plans to further expand its franchises to mobile devices. The company publishes the popular “Call of Duty” franchise under its Activision brand, its “World of Warcraft” franchise under its Blizzard brand along with its “Overwatch” and “Diablo” and “Candy Crush” franchises under its King brand. Activision acquired Blizzard in 2008, through its merger with Vivendi’s gaming business, and King Digital Entertainment in 2016.
In recent years, mobile games have been the fastest growing platform in the video game industry, accounting for about half of the roughly $ 180 billion in sales in 2020, with PC and console games representing the other half, according to with IDC data.
Of the 34 analysts covering Activision Blizzard, 28 have stock buy ratings, five have wait ratings and one has a sell rating, according to FactSet. Of these, 20 increased their price targets, raising the average share price target to $ 108.86 from $ 92.68 earlier, according to data from FactSet.
Alexia Quadrani, an analyst at JPMorgan, which has an overweight rating on shares and has raised its target price from $ 101 to $ 115, expects the “Call of Duty” franchise to become the model for the company’s other securities.
“Call of Duty” not only follows the traditional console and PC sales route with its titles “Black Ops – Cold War” and “Modern Warfare”, but the franchise has a free-to-play Battle Royale option “Warzone” similar to “Fortnite” by Epic Games Inc., with all of these options available on a mobile platform.
“The success at CoD in 2020 significantly exceeded expectations at the beginning of the year (even adjusting for the pandemic), and we expect ATVI to apply business model innovation similar to other titles, using mobile devices to extend reach and free modes -to-play to drive the conversion of players to premium games, ”said Quadrani.
Stifel analyst Drew Crum, who has a buy rating and a target price of $ 108 for the shares, remained optimistic about potential developments at the company, although he considered the mixed results.
“We think this (however) has been replaced by management’s (positive) comments on 21 (and beyond), which provided a larger context around the timing of major initiatives and what appears to be preparing for a potentially massive year in 22 ”Said Crum.
Raymond James analyst Andrew Marok, who has a higher performance rating and has raised his share price target from $ 109 to $ 120, said he still thinks the company “has a lot of room to reach new players through mobile and free-to-play offers and capitalize on strong demand for new titles planned in existing franchises. ”
UBS analyst Eric Sheridan, who has a buy rating and raised his target price from $ 116 to $ 120, said Activision Blizzard has remained true to the theme of the past 12 months.
The company’s earnings report was “demonstrating how the broader industry benefited from the ‘stay at home’ dynamic, but remained focused on [long term]”Said Sheridan.
“In the latter, the industry is positioned to be a net shareholder in media consumption, to benefit from a blurring of lines in platform and game preferences on a global basis (increasingly mobile first) and to continue allocating capital to a mix of growth and shareholders, ”said the UBS analyst.
Wells Fargo analyst Brian Fitzgerald, who has an overweight rating and a $ 120 price target, asked in a note: “How big and profitable can that get?”
Last year, Activision Blizzard outlined four pillars of its long-term strategic growth: more new releases, improving live operations, extending popular PC and console games to mobile platforms, and adding “new engagement models” as a branch to players based on city leagues and electronic sports.
Fitzgerald said the management “made it clear that it expects a ‘radical change’ in financial performance in FY22, and we have no reason to doubt its ability to execute the four-pillar growth strategy for non-Call of Duty franchises” .
Piper Sandler analyst Yung Kim, who has an overweight rating and a $ 120 price target, thought the company’s forecast was conservative, as it did not include the expected launches of the “Diablo” and “Overwatch” franchises.
“Activision expects full-year growth for the Call of Duty franchise, despite the difficult comparison with the launch of Call of Duty Warzone on March 20, which was also driven by the start of regulations to stay at home around CV -19, ”said Kim. “Despite high expectations, we continue to suspect a strong dose of conservatism.”
Kim said he hopes to hear more details about the company’s BlizzConline 2021 program, which begins on February 19.
Meanwhile, Cowen analyst Doug Creutz, who has a market performance rating and a $ 100 price target, expressed some skepticism about the company’s forecast of two more franchises – probably “Diablo” and “Overwatch” , he says – contributing $ 1 billion in annual revenue, in addition to “Call of Duty”, “World of Warcraft” and “Candy Crush”.
“This is a very bold prediction, given the relative scarcity of such franchises on the market and Blizzard’s recent evident struggles beyond WoW,” said Creutz. “However, we expect most investors to give management the benefit of the doubt (at least for now).”
In the past 12 months, Activision’s shares gained 73%, while iShares Expanded Tech-Software Sector ETF IGV,
grew 48%, the S&P 500 SPX index,
increased 17%, and the high-tech Nasdaq Composite index,
won 46%.
On Tuesday, shares in Electronic Arts Inc. EA,
retreated from a record high closing after the video game publisher released quarterly results that fell short of Wall Street expectations. Take-Two Interactive Software Inc. TTWO,
is scheduled to release its results after the markets close on Monday.
In turn, EA’s shares closed Friday with a 1.9% rise to $ 141.22 and rose 31% in the last 12 months, while Take-Two’s shares closed a 3% rise to $ 207.49, and rose 72% in the last 12 months.