Why Activision Blizzard (ATVI) Stock Is Declining Today

NEW YORK (TheStreet) -- Activision Blizzard (ATVI) shares are down 0.6% to $21.68 on Monday after the video game maker hired former New York City mayor Rudolph Giuliani to defend it against a lawsuit filed by Manuel Noriega over his role in the company's popular Call of Duty video game, according to Bloomberg.

Noriega, the former Panamanian dictator who was convicted of drug trafficking charges in 1992, sued to have his likeness removed from the company's video game back in July.

Activision will petition the court to dismiss the lawsuit with Giuliani saying "What's astonishing is that Manuel Noriega, a notorious dictator who is in prison for the heinous crimes he committed, is upset about being portrayed as a criminal and enemy of the state in the game Call of Duty."STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings team rates ACTIVISION BLIZZARD INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ACTIVISION BLIZZARD INC (ATVI) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, ATVI's share price has jumped by 26.93%, exceeding the performance of the broader market during that same time frame. 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.
  • ATVI's debt-to-equity ratio of 0.60 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.99 is very high and demonstrates very strong liquidity.
  • The gross profit margin for ACTIVISION BLIZZARD INC is currently very high, coming in at 76.29%. Regardless of ATVI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ATVI's net profit margin of 21.03% compares favorably to the industry average.
  • ACTIVISION BLIZZARD INC reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, ACTIVISION BLIZZARD INC reported lower earnings of $0.95 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.32 versus $0.95).
  • You can view the full analysis from the report here: ATVI Ratings Report
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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