Activision Blizzard (ATVI) Stock Up on Price Target Hike
NEW YORK (TheStreet) -- Activision Blizzard (ATVI) - Get Report stock is up 1.49% to $37.54 in pre-market trading on Thursday after its price target was increased to $45 from $33 at Jefferies, which maintained a "buy" rating on the stock.
On Monday, the video game company agreed to acquire King Digital Entertainment (KING) in a $5.9 billion transaction, which will add 474 million monthly gamers, Jefferies said in an analyst note.
The transaction also brings in Candy Crush, which has a high-margin revenue stream and a strong mobile audience.
Activision Blizzard's intellectual property combined with King Digital Entertainment's mobile distribution is expected to boost the combined company's performance.
Activision Blizzard's fiscal 2016 earnings are estimated at $1.64 per share without King Digital Entertainment, but could rise to about $2.04 per share after the acquisition closes, analysts added.
The acquisition is expected to close by March 2016.
Separately, TheStreet Ratings team rates ACTIVISION BLIZZARD INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
We rate ACTIVISION BLIZZARD INC (ATVI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 18.7%. Since the same quarter one year prior, revenues rose by 31.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 666.66% and other important driving factors, this stock has surged by 73.28% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ATVI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- ACTIVISION BLIZZARD INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ACTIVISION BLIZZARD INC increased its bottom line by earning $1.14 versus $0.95 in the prior year. This year, the market expects an improvement in earnings ($1.34 versus $1.14).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 652.2% when compared to the same quarter one year prior, rising from -$23.00 million to $127.00 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, ACTIVISION BLIZZARD INC's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: ATVI
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.