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Activision Blizzard Stock Gains on Earnings as Analysts Look Past Harassment Suit

Activision Blizzard stock gains as analysts look past a sexual harassment lawsuit filed against the 'Call of Duty' video-game developer and focus on earnings.

Activision Blizzard  (ATVI) - Get Activision Blizzard, Inc. Report stock gained nearly 6% Wednesday after the “Call of Duty” and “Black Ops” video-game developer reported stronger-than-expected second-quarter results and lifted its guidance, prompting analysts to look past the company's recent troubles related to a sexual harassment lawsuit.

At last check, Activision Blizzard shares were up 2.39% at $81.74 after the Santa Monica-based company reported earnings that topped estimates, helped by a rebound in playing hours on its "Call of Duty" franchise game.

The better-than-expected earnings and guidance came amid a sexual harassment lawsuit from the California Department of Fair Employment and Housing and an employee walkout. 

It also followed by hours the departure of Blizzard President J. Allen, who stepped down from the company, which announced that Jen Oneal and Mike Ybarra would be taking over.

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The lawsuit, filed on July 20, alleges equal pay violation sex discrimination and sexual harassment at Activision Blizzard. It also claims company’s executives failed to take reasonable steps to prevent unlawful conduct.

Wall Street analysts mostly focused on the numbers, with Jefferies analyst Andrew Uerkwitz noting that the results “show some encouraging signs, notably that gamers are not cutting their spending significantly, while guidance sounds conservative but confident.”

Baird analyst Colin Sebastian wrote in his own post-earnings note to clients that while Activation Blizzard has had a “rough few weeks” that early actions by management are encouraging,” reminding investors that the company has a “rock-solid” portfolio of games.

Barclays analyst Mario Lu shared a similar message with his clients, noting that Activation Blizzard’s main franchises are “looking robust,” and that while the lawsuit will be an overhang “a shake-up of top Blizzard management will be a sign of improvements to come.”

Shares of Activision Blizzard have fallen more than 6% over the past five trading days. Year to date the stock has declined 11.2%.