Wedbush’s Michael Pachter noted that despite the meaningful EPS beat, the fiscal-year 2017 guidance issued by Activision Blizzard, Inc. (NASDAQ:ATVI) was well below consensus.

The analyst maintains an Outperform rating on the company, with a price target of $53.

Disappointing Guidance

Pachter mentioned that Activision Blizzard reported its quarterly EPS at $0.92, well ahead of the estimate, guidance and consensus, with revenue of $2,452 million, modestly ahead of the expectations and guidance.

The upside for the quarter was driven by “broad strength from Blizzard titles, partially offset by disappointing 'Call of Duty: Infinite Warfare' sales,” the analyst stated.

However, the fiscal-year 2017 guidance was meaningfully below expectations, implying a modest top-line decline and meaningfully lower EPS.

Activision Blizzard guided to revenue of $6,300 million and EPS of $1.85, as compared to the consensus forecasts of $6,699 million in revenue and EPS of $2.03.

Estimates Revised

“Our prior estimates were substantially higher, as we anticipated Blizzard to launch an expansion pack for World of Warcraft in 2017 and we expected another Skylanders game launch at holiday,” Pachter pointed out.

The analyst now expects the company to generate revenue of $6,764 million, down from the earlier estimate of $7,125 million, driven by lighter sales of Call of Duty catalog, Skylanders, and the lack of a new Blizzard title.

However, Pachter also believes that Activision Blizzard “could earn $3.00 by 2018 if it optimizes King’s untapped advertising opportunity.”

In pre-market session, shares of Activision were up 13.99 percent at $45.25.