Analysts Like Activision Blizzard's 2019 Performance, 2020 Gameplan

Analysts were pleased with Activision Blizzard, Inc. ATVI’s second-quarter earnings beat and largely unphased by lower projections for third-quarter revenue, continuing to see the video game maker’s 2019 as a rebuilding and investment year ahead of a more exciting future.

Activision Blizzard reported second-quarter earnings of 38 cents a share, besting the Street estimate of 26 cents on revenue of $1.21 billion, slightly ahead of analysts’ expectations.

Analysts see several catalysts ahead for the “Call of Duty” and “World of Warcraft” producer and several weighed to reiterate bullish recommendations.

The Analysts

Credit Suisse analyst Stephen Ju maintained an Outperform rating on the stock with a $64 target price.

UBS analyst Eric Sheridan kept a Buy rating on the stock and raised the price target from $52 to $56.

Bank of America analyst Ryan Gee reiterated a Buy rating and raised the target price from $56 to $57.

SunTrust Robinson Humphrey’s Matthew Thornton maintained a Buy rating and a $52 price target on the stock.

The Theses

The Street has been braced for a muted investment year in 2019 with no expectations for blockbuster money-makers, but the company has now turned in what analysts consider two solid quarters.

Sheridan noted that investments are beginning to yield engagement and monetization improvements in several game franchises and with the company’s blow-out Blizzcon gaming convention to promote its franchises coming up in November and a new “Call of Duty” launch, Sheridan said UBS sees the company emerging from the lowered expectations.

Gee said Activision Blizzard still has the best long-term potential in the category, and like many on the sell-side, was looking ahead to 2020.

“The decision to re-invest the 2Q beat into content, as well as management’s bullish tone on the “Call of Duty” franchise and BlizzCon (CEO called it “best ever”), supports our positive view on how we think the stock may perform into 2020,” Gee wrote.

Ju was also looking beyond the current year.

“We continue to submit that 2019 is a rebuild year with the company focusing scarce resources on highest ROI projects, as well as exploring various/new monetization models,” Ju wrote in a note, adding that the company is continuing to “dig out from (a) trough 2019.”

Thornton also continued to recommend Activision, saying he remains upbeat about upcoming releases, including “World of Warcraft Classic,” this month and the newly announced “Call of Duty Mobile” coming this fall.

Price Action

Activision Blizzard shares were down 2.77% at $47.97 Friday afternoon.

Related Links:

Video Game Stocks Continue To Trade Lower Following Launch Of 'Apex Legends' Season 2

UK Tax Watchdog Alleges Activision Blizzard, Rockstar Avoided Taxes