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Play Activision Blizzard Only if You're a Gamer: Opinion

Stocks in this article: ATVI EA DLB SIRI

Investor Interest

The Wall Street analysts like the stock and issued 11 strong buy, nine buy and five hold recommendations for their clients. If their numbers are correct they look for investors to receive an annual total return in the 24%-28% range while TheStreet's rating system ranks this only a B stock. The individual investor as represented by 7,198 readers of Motley Fool gave the stock a 97% vote to beat the market. That sentiment is also reflected by the short interests which has declined from a high of 29 million shares in March to around 15 million shares recently.

Industry Peers

While Activision Blizzard was up 4% over the past 12 months, Research In Motion (RIMM) Sirius XM Radio (SIRI) was up 50%, Research In Motion (RIMM) Electronic Arts (EA) was down 34% and Research In Motion (RIMM) Dolby Labs (DLB) was up 5%.

SIRI is ranked A by TheStreet and analysts project revenue will be up 12.90% this year and another 11.60% next year. Earnings are estimated to be up 685.7% this year and down 81.8% next year but average out over the next five years by an annual rate of 25.2%.

EA is ranked C by TheStreet and revenue projections are down 0.60% this year and up 6.6% next year. Earnings are expected to be up 24.7% this year, 17.9% next year and average 18.04% annually for the next five years

DLB gets a C rating from TheStreet with revenue projected to decrease 4.60% this year and be flat the next year. Earnings estimated to be down 12.4% next year, down an additional 1.7% next year but increase and average around 14.25% annual growth over the next five years.

Conclusion: Activision Blizzard is not a stock for me in spite of the interest by Wall Street analysts and the individual investor. I look for stocks with nice, steady increases in revenue and earnings in the 10% range and I don't see that here.

Although the balance sheet is solid with lots of cash and no debt income investors will not be interested in a 1.50% dividend. If you are younger and follow the online gaming industry you might like the analysts projections of total annual returns in the 24%-28% range.

It would appear from the moving averages and turtle channels that the stock will need close monitoring to plot an entry point, and that this may be a good time for long-term speculators to place a bet.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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