Activision’s share price hits 1984 levels, record valuation in expansion plans

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Activision Blizzard Inc. shares closed Friday at their highest price since 1984, or an all-time high when several stock splits are taken into account, following strong gains and an outlook that seeks to take more advantage of the mobile gaming market in fast growth. .Activision Blizzard ATVI, + 9.64%, was up more than 12% intraday Friday and closed 9.6% higher at $ 101.61. That’s the first time Activision’s stock price has ended above $ 100 since Jan. 20, 1984, when the stock closed at $ 103.12, according to FactSet data. However, taking into account the nine stock splits since then, the shares ended at an all-time high for a record market capitalization of $ 78.53 billion, according to FactSet.

On Thursday night, Activision Blizzard reported quarterly results and an outlook that beat Wall Street expectations, along with plans to expand more of its franchises to mobile devices. The company publishes the popular “Call of Duty” franchise under its Activision brand, its “World of Warcraft” franchise under its Blizzard brand along with its “Overwatch” and “Diablo” franchises, and “Candy Crush” under its King brand. Activision acquired Blizzard in 2008, through its merger with Vivendi’s gaming business, and King Digital Entertainment in 2016. In recent years, mobile games have been the fastest growing platform in the video game industry, representing approximately Half of the roughly $ 180 billion in 2020 sales with PC games and consoles make up the other half, according to IDC data. Of the 34 analysts covering Activision Blizzard, 28 have buy ratings on the stock, five have retention ratings and one has a sell rating, according to FactSet. Of those, 20 raised their price targets, raising the stock‘s average target price to $ 108.86 from a previous $ 92.68, according to FactSet data. JPMorgan analyst Alexia Quadrani, who has an overweight rating on the stock and raised her price target to $ 115 from $ 101, expects the “Call of Duty” franchise to become the template for the company’s other titles. Not only does “Call of Duty” follow the traditional console and PC sales route with its “Black Ops – Cold War” and “Modern Warfare” titles, but the franchise has a free “Warzone” battle royale option similar to “Fortnite” by Epic Games Inc., with all those options available on a mobile platform. “CoD’s success in 2020 significantly exceeded expectations at the beginning of the year (even adjusting to the pandemic), and we expect ATVI to apply a similar business model innovation to other titles, using mobile devices to expand reach and free modes. . to drive the conversion of players to premium games, “said Quadrani. Stifel analyst Drew Crum, who has a buy rating and a price target of $ 108 for the stock, remained positive about potential developments at the company despite considering the mixed results. “We think this (however) is superseded by management’s (positive) comment on ’21 (and beyond), which provided more context on when the key initiatives, and what appears to be preparing a year potentially massive in ’22, “Crum said. Raymond James analyst Andrew Marok, who has a superior performance rating and raised his stock price target to $ 120 from $ 109, said he still believes the company “has a long way to go to reach new players through offerings. mobile and free and capitalize on demand for new planned titles in existing franchises. “UBS analyst Eric Sheridan, who has a buy rating and raised his target price to $ 120 from $ 116, said Activision Blizzard stayed true to its theme. The company’s earnings report was “showing how the industry as a whole has benefited from the ‘stay at home’ dynamic but staying focused on the [long term]”Said Sheridan.” In the latter, the industry is poised to take a net share of media consumption, benefit from the blurring of the lines in platform and gaming preferences by a global base (increasingly more mobile first) and continue to allocate capital to a mix of growth and shareholders, “said UBS analyst. Wells Fargo analyst Brian Fitzgerald, who has an overweight rating and a price target of $ 120, asked in a note. : “How Big and Profitable Can This Get?” Last year, Activision Blizzard outlined four pillars of its long-term strategic growth: more new releases, improved live operations, extension of popular PC games, and consoles to mobile platforms and the addition of “new engagement models,” such as diversifying into city-based players, leagues and esports. Fitzgerald said management “was clear that e they expected a ‘sea change’ in financial performance in fiscal year 22, and we have no reason to doubt their ability to execute the four-pillar growth strategy for non-Call of Duty franchises. ” Piper Sandler analyst Yung Kim, who has an overweight rating and a $ 120 price target, thought the company’s forecast was conservative by not including expected releases from the “Diablo” and “Overwatch” franchises. “Activision seeks year-round growth for the Call of Duty franchise, despite a difficult comparison to the Call of Duty Warzone launch on March 20, which was also fueled by the start of stay-at-home regulations in around CV -19, ”Kim said. “Despite high expectations, we continue to suspect a strong dose of conservatism.” Kim said he looks forward to hearing more details from the company’s BlizzConline 2021 program that begins on February 19. Meanwhile, Cowen analyst Doug Creutz, who has a market performance rating and a $ 100 price target, expressed some skepticism at the company’s forecast of having two more franchises, likely “Diablo” and “Overwatch.” says, they contribute a billion dollars in annual revenue, in addition to “Call of Duty,” “World of Warcraft” and “Candy Crush.” “This is a pretty bold prediction, given the relative scarcity of such franchises on the market and the obvious recent struggles of Blizzard in addition to WoW,” Creutz said. “Nonetheless, we expect most investors to give management the benefit of the doubt (at least for now).” In the last 12 months, Activision shares have gained 73%, while iShares Expanded Tech-Software Sector ETF IGV, + 1.67% has grown 48%, the S&P 500 SPX index, + 0.39% has up 17%, and heavy technology Nasdaq COMP Composite Index, + 0.57% has gained 46%. On Tuesday, Electronic Arts Inc. EA shares, + 1.87%, retreated from a closing record after the video game publisher reported quarterly results that fell short of Wall Street expectations. Take-Two Interactive Software Inc. TTWO, + 2.98% is scheduled to report its results after the markets close on Monday. For its part, EA shares closed on Friday 1.9% higher at $ 141.22, and rose 31% in the last 12 months, while Take-Two shares closed 3% higher. % to $ 207.49, up 72% in the last 12 months.