Piper's Earnings Preview For Gaming Sector: 3 Stocks At Overweight

Video gaming companies are on deck to report their quarterly earnings results, and Michael Olson of Piper Jaffray offered his take in a research report.

Electronic Arts

Electronic Arts Inc. EA (reporting November 1) is expected to report an in-line quarter even though September's NPD software sales show a 21 percent year-over-year decrease due to a difficult comp.

The company's guidance calls for a 6 percent decrease in total revenue to $1.08 billion, which matches the analyst's expectations. However, the company increase its full-year fiscal 2017 guidance slightly higher due to higher digital revenue and a stronger than expected launch of "Battlefield 1."

Shares of Electronic Arts remain Overweight rated with an unchanged $89 price target.

Related Link: Are Video Game Releases An Opportunity For Traders?

Activision Blizzard

Activision Blizzard, Inc. ATVI (reporting November 4) is expected to deliver a strong third-quarter earnings print despite NPD data showing a 38 percent year-over-year decrease in revenue in the Activision segment due to the move of "Skylanders" toward an October launch instead of September.

The analyst is expecting a 76 percent increase in revenue from the Blizzard segment due to the launch of a "Wow Legion" expansion.

Olson is expecting management to boost its fiscal 2016 guidance modestly based on a conservative outlook for "Overwatch" digital content sales and limited synergies from its King Digital acquisition.

The analyst also believes Activision is on track to generate $1 billion in incremental revenue by 2020 through King advertising, eSports and consumer products and content.

Shares of Activision Blizzard remain Overweight rated with an unchanged $51 price target.

Take Two Interactive

The analyst's bullish stance on the video sector extends to Take-Two Interactive Software, Inc. TTWO.

In a research report on Monday, Olson reiterated an Overweight rating and $51 price target after the company released its first RDR2 trailer.

The analyst believes that interest in "RDR 2 "ranks "among the best selling titles of the past few years" given the 4.4 million trailer views in a day.

The trailer's release also offers investors much needed visibility into its 3–4-year outlook.

At Last Check ...

• Activision was up 1.91 percent at $45.39.
• Electronic Arts was up 1.43 percent at $84.06.
• Take-Two was up 1.77 percent at $45.78.

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