Analyst Gerrick Johnson upgraded the stock to outperform from market perform.
Shares of the Santa Monica, Calif., company were climbing 2.19% to $95.21 on Tuesday
Last week, Activision Blizzard raised its outlook and reported better-than-expected first-quarter revenue and earnings, boosted by in-game sales in its latest “Call of Duty” franchises.
"Stagnant so far in 2021, we think shares of Activision Blizzard are poised to outperform," Johnson said in a research note. "We think the market has digested ATVI's 2020 gains, sellers have taken their profits, and 'sell the COVID winners' bears have shaken out."
Johnson, who also raised his price target on the stock to $116 from $104, said he admires Activision Blizzard's long-term strategy, and has more confirmation the company is on the right path after recent strong performances of "Call of Duty" and "World of Warcraft."
"With the broadest library of content in gaming available to activate, we are confident in outperformance over the long term," Johnson said.
The analyst said that "Call of Duty" and "World of Warcraft" offer "multiple proof-points that re-masters and multiple free-to-play entry points create a larger, more sustainable franchise ecosystem."
"We are about to see the same strategy set in motion with the 'Diablo Franchise' as we await free-to-play 'Diablo Immortal' mobile and remastered 'Diablo II: Resurrected' launches later this year, ahead of a new premium 'Diablo IV' offering in two years' time," Johnson said.
The analyst noted that "Crash Bandicoot On the Run" an internally developed mobile game from King, was "a surprising success," reaching 9.1 million downloads in its first day.
"This should give the company confidence to dive deeper into the mobile arena, both through partners like TenCent (Call of Duty) and NetEase (Diablo Immortal), as well as on its own with its own internal teams," Johnson said.
Late last month, TheStreet founder Jim Cramer said during a "Mad Money Lightning Round" that Activision Blizzard was a "good company and I'm a buyer."
Activision Blizzard said in February that it was "entering 2021 with strong momentum" as it reported fourth-quarter results.