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Activision Tops Earnings Estimates: What Wall Street Is Saying

Activision Blizzard topped analysts' fourth-quarter estimates and Wall Street was mostly bullish on the stock.
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Shares of videogame maker Activision Blizzard  (ATVI) - Get Activision Blizzard Inc Report jumped Friday on strong fourth-quarter results

Activision shares at last check jumped 9.6% to $101.57.

Here is what Wall Street is saying about Activision's quarter. 

JPMorgan (Overweight Rating Maintained, PT raised to $115 from $101)

We raise our estimates for both 2021 and 2022 and continue to view our forecasts as conservative. On 2021 earnings-per-share guidance, the stock is trading at 26 times (net of cash), putting it at the higher end of its recent trading range. We continue to note,  however, that on a relative basis, this is only an about 15% premium to the S&P, below the 25% three- and five-year averages, and well below peak of about 70% in mid-2018. ATVI’s results also make clear, in our view, that the company's franchises are in a far stronger place relative to a few years ago, and in that context we see continued room for upside to the multiple.

-Alexia Quadrani 

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Oppenheimer (Outperform Rating Maintained, PT raised to $110 from $95)

Activision Blizzard has entered a transition period to reposition its studio assets and development talents in response to aging franchises and new-player engagement and monetization trends. So far, it has executed a series of successful turnaround for its core franchise, "Call of Duty." We believe momentum in "CoD: Modern Warfare," "CoD Mobile," as well as "CoD: Warzone" will offer material near-term upside and result in multiple expansion longer term as investors regain confidence in ATVI's ability to innovate, protect its core franchises, and grow its audience across platforms. 

-Andrew Uerkwitz

Credit Suisse (Outperform Rating Maintained, PT increased to $120 from $106)

Results once again exceeded our expectations, driven by strong digital revenues from "Call of Duty" across Warzone, mobile and the premium launch as well as sustained subscriber growth and sales from "World of Warcraft: Shadowlands," modestly offset by lower-than-expected retail sales due to the current environment.

More importantly, management provided a more explicit roadmap for ongoing step function increases in earnings-per-share growth in the coming years, as it begins to reap the rewards of investments to expand the audience of its franchises – similar to the playbook it is currently executing against "Call of Duty" with free-to-play and mobile versions to add to the existing premium release.

-Stephen Ju

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