Activision Shares Said To Have 'Strong Upward Bias' With These 4 Technical Indicators

The strong fundamentals of Activision Blizzard, Inc. ATVI are supported by technicals as well.

Needham analyst Laura Martin said shares have strong upward bias, with several positive technical indicators. Listing down the positive technical indicators, the analyst said:

• Activision Blizzard shares are currently trading above their 50-day simple moving average and 20-day exponential moving average. A crossover of a stock above its moving average is seen as bullish signal.
• Money flows into the stock have been mostly positive thus far in 2017.
• Volumes traded have been relatively higher at current levels, signaling the conviction of buyers.
• A MACD crossover looks like the shares are headed higher. A moving average convergence divergence, or MACD, is a momentum indicators, which is based on the relationship between two moving average, normally calculated as a subtraction of the 26-day EMA from the 12-day EMA. If the shorter-term EMA crossed over the longer-term EMA, it's considered a bullish signal.

See Also: 4 Tips To Improve Your Technical Analysis

ATVI Source: Y Charts

Fundamental Strength

Needham noted that the company's addressable market is growing 16 percent year-over-year, as mobile games and fremium business models attract new types of gamers. Additionally, revenue/player is rising 6 percent and churn is dipping 4 percent, the firm added.

"Margins are rising 200-300 basis points/year as physical disks transition to digital downloads," Needham said. "We are optimistic about ATVI's near-term sequels, which should drive Christmas gift-giving (including Overwatch) and ATVI's $1B share buyback (limits investor risk) and 15% dividend increase."

As such, Needham initiated coverage of Activision Blizzard with a Buy rating and $75 price target.