Activision Blizzard Gets Price Hike Ahead of Latest 'Call of Duty' Release

An analyst at Stephens increased his price target on shares of gaming company Activision Blizzard to $72 from $67.
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An analyst at Stephens increased his price target Monday on shares of gaming company Activision Blizzard (ATVI) - Get Report to $72 from $67 and named the maker of "Call of Duty" as his 2020 Best Idea, replacing Zynga (ZNGA) - Get Report.

Analyst Jeff Cohen said in a note to investors that with Activision shares off 10% from their recent high of $64.53, "we believe this is an attractive buying opportunity ahead of the rumored 'Call of Duty Warzone'  (battle royale mode), potentially launching in the next week."

Shares were up slightly to $58.46.

Cohen, who maintained his overweight rating on the stock, said there were several reasons "to buy the dip on Activision," noting that the "Call of Duty Warzone" battle royale mode "should provide a positive near-term catalyst and help sustain the already strong engagement / monetization of Modern Warfare."

Details around the new mode are still scarce, Cohen said, but several credible "Call of Duty" leakers are expecting its release some time between March 3 and March 10.

"We believe the hype surrounding this battle royale mode should have a positive impact on engagement and spending, which has already been very strong for Modern Warfare," he said.

In addition, Cohen said that 14% of Activision's revenue comes from the Asia Pacific region, noting that "this should provide a tailwind if coronavirus continues to impact consumer behavior in Asia for a prolonged period, as gaming has been one of the main beneficiaries in terms of increased time spent due to quarantine."

Cohen also said the company has its largest net cash position since 2012, which gives management the firepower for acquisitions, which he counted as a positive, given their strong track record.