NEW YORK (TheStreet) -- Activision Blizzard (ATVI) - Get Report is advancing by 1.78% to $39.72 in early morning trading on Tuesday, after the company was named the "big holiday winner" in the video game industry following the success of "Call of Duty Black Ops III" this year, Pacific Crest said in an analysts note.
The firm maintained its "overweight" rating and $41 price target on the Santa Monica, CA-based video game developer and publisher.
Sales of "Call of Duty Black Ops III" are expected to surpass expectations as the game maintains its top position over other popular games this season, including Electronic Arts' (EA) "Star Wars Battlefront" and Microsoft Corp.'s (MSFT) "Halo 5: Guardians," according to store checks by Pacific Crest.
"Our checks have consistently mentioned 'Call of Duty Black Ops III' as the top game this holiday season and that sales are up year-over-year due to the first three-year development cycle for 'Black Ops' and the return of the ever-popular Zombies mode," analysts added. "We remain positive on ATVI headed into 2016."
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate ACTIVISION BLIZZARD INC as a Buy with a ratings score of A. 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. We feel its strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 16.7%. 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 91.99% 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 ($1.36 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