Morgan Stanley: Activision Blizzard Has Multiple Catalysts In 2019

Activision Blizzard, Inc. ATVI may be struggling, but it received a vote of confidence from a still-bullish analyst this week. 

The Analyst

Morgan Stanley Brian Nowak maintains an Overweight rating and lowered his price target from $72 to $60.

The Thesis

The last six months have been rocky for Activision Blizzard, but Nowak said the company has three catalysts forthcoming in 2019: "Diablo," the Electronic Entertainment Expo and BlizzCon. 

Although Morgan Stanley does not model for "Diablo Immortal" to come out until 2020 in its base case, Nowak said the mobile game could be launched globally this year. 

The E3 conference in June will be a key opportunity to showcase the Activision studio pipeline, including this year’s "Call of Duty" title, the analyst said. Morgan Stanley is seeking more details on a potential free "Blackout" mode as a way to drive higher digital engagement and monetization prior to a full "CoD" launch in the fourth quarter, he said. 

BlizzCon 2019 in November will be critical, as it will set expectations for the 2020 Blizzard release slate, Nowak said. 

“In our view, confirming a new console/PC 'Diablo' launch would be a positive catalyst, as it will increase investor visibility into the EPS pipeline." 

The impact of the growth of digital gaming and more free-to-play options like "Fortnite" is that gamers are playing their favorite games for longer and they have more options, meaning only the best content will be successful, the analyst said. 

“There are no more ‘B’ titles ... gaming is now a world of ‘As’ and ‘Ds’." 

Price Action

Activision Blizzard shares were up 1.33 percent at $47.90 at the time of publication Friday. 

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