Shares of Activision Blizzard Inc. they closed on Friday at their highest price since 1984, or at an all-time high when several stock fractions are taken into account, after strong gains and a prospect that seeks to take more advantage of the fast-growing mobile gaming market. .
Activision Blizzard ATVI,
shares rallied more than 12% Friday intraday and closed 9.6% at $ 101.61. This is the first time that the price of Activision shares has ended above $ 100 since January 20, 1984, when the shares closed at $ 103.12, according to FactSet data. However, accounting for the nine stock fractions since then, the shares ended at an all-time high to reach a record market cap of $ 78.53 million, according to FactSet.
On Thursday afternoon, Activision Blizzard reported quarterly results and a outlook that exceeded Wall Street expectations, along with plans to expand more of its franchises to mobile. The company publishes the popular “Call of Duty” franchise with its Activision brand, its “World of Warcraft” franchise with its Blizzard brand along with its “Overwatch” and “Diablo” and “Candy Crush” franchises with 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 gaming has been the fastest growing platform in the video game industry, accounting for about half of the roughly $ 180 billion in sales by 2020, with PC-based games and consoles making up the other half, according to IDC data.
Of the 34 analysts covering Activision Blizzard, 28 have stock ratings on the stock, five have stock ratings and one has a sell rating, according to FactSet. Of those, 20 raised their price targets, raising the average stock price target to $ 108.86 from the previous $ 92.68, according to FactSet data.
JPMorgan analyst Alexia Quadrani, who has an overweight valuation in stocks and raised its target price to $ 115 from $ 101, expects the Call of Duty franchise to become the template for other stocks of the company.
“Call of Duty” not only follows the traditional route of selling consoles and computers with its titles “Black Ops – Cold War” and “Modern Warfare”, but the franchise has a real free battle option “Warzone” similar to “Fortnite” from Epic Games Inc., with all of these options available on a mobile platform.
CoD’s success in 2020 significantly exceeded year-end expectations (even adjusting to the pandemic), and we expect ATVI to implement similar business model innovations to other titles, using mobile to expand the scope and modes of free play to drive the conversion of players to premium games, ”Quadrani said.
Stifel analyst Drew Crum, who has a buy rating and a target price of $ 108 in shares, remained positive on the company’s possible developments, although he considered the results to be mixed.
We believe this (however) is being replaced by management’s (positive) comment on ‘21 (and beyond), which provided a larger context around the timing of key initiatives and what seems to be setting up for a potentially massive year on the 22nd, ”Crum said.
Raymond James analyst Andrew Marok, who has surpassed the rating and raised his target price to $ 120 from $ 109, said he still thinks the company “has a lot of track to reach new players through ‘free mobile offers and capitalize on demand for new titles planned in existing franchises’.
UBS analyst Eric Sheridan, who has a buy rating and raised his price target from $ 120 to $ 120, said Activision Blizzard has stayed true to its theme for the past twelve months.
The company’s profit report showed how the wider industry has benefited from the “stay at home” dynamic, but has remained focused on the [long term]Sheridan said.
“In the latter, the industry is poised to be a net share in media consumption, benefiting from a spread of platform lines and gaming preferences by a global base (increasingly more mobile first) and continue to allocate capital to a mix of growth and shareholders, ”the UBS analyst said.
Wells Fargo analyst Brian Fitzgerald, who has an overweight rating and a $ 120 target price, asked in a note, “How big and profitable can you get this?”
Last year, Activision Blizzard outlined four pillars of its long-term strategic growth: more new releases, improved live operations, extended popular PC and console games to mobile platforms, and added “new interaction models.” such as using a city-based player. leagues and sports.
Fitzgerald said management was clear that they expected a “change of pace” in financial performance during fiscal 22, and we have no reason to doubt its ability to execute the four-pillar growth strategy for franchises other than “Call of Duty.”
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 releases of the “Diablo” and “franchises.” Overwatch “.
“Activision is looking for year-round growth for the Call of Duty franchise, despite a difficult comparison with the launch of Call of Duty Warzone on March 20, which was also driven by the emergence of permanence regulations in house around CV -19, ”Kim said. “Despite high expectations, we continue to suspect a strong dose of conservatism.”
Kim said she hopes to hear more details from the company’s BlizzConline 2021 program that begins Feb. 19.
Meanwhile, Cowen analyst Doug Creutz, who has a market rating and a target price of $ 100, expressed some skepticism about the company’s forecast of having 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 pretty bold prediction, given the relative scarcity of these franchises in the market, and Blizzard’s obvious recent struggles aside from WoW,” Creutz said. “However, we expect most investors to give management the benefit of the doubt (at least for now).”
Over the last twelve months, Activision shares have gained 73%, while the IGV ETF in the iShares expanded software technology sector,
has grown by 48%, the S&P 500 SPX index,
has risen 17%, and the Nasdaq COMP Composite Index
has gained 46%.
On Tuesday, shares of Electronic Arts Inc. EA,
withdrew from the record high after the video game publisher reported quarterly results that did not meet Wall Street expectations. Take-Two Interactive Software Inc. THREE,
it is expected to report its results after markets close on Monday.
EA shares closed 1.9% at $ 141.22 on Friday and rose 31% over the past 12 months, while Take-Two shares closed 3% at 207. , $ 49 and increased 72% over the past 12 months.