Video Game Round Up; Deutsche Bank (ERTS, ATVI, TTWO)

Video game sales are continuing to slump into June. Software sales were down 15%, worse than expectations of a 12% decline. The best selling game in June was Take Two's TTWO Red Dead Redemption. Other top selling titles were Nintendo's Super Mario Galaxy 2, Disney's Toy Story 3, and Warner's Lego Harry Potter. Deutsche Bank recommends Activision Blizzard ATVI, since 2/3rds of 2010E profits come from Blizzard's subscriptions. The price target of $15 is based on 16x CY11E EPS of$0.78 plus $2.66 in cash. Shares of Activision are currently trading at $11.33. The analysts rate Electronic Arts ERTS Sell, because the company has significant exposure to console software sales. The $12 price target is based on 15x FY11E EPS of $0.40 plus $6 in cash. Shares of EA are currently trading at $15.49.