NEW YORK (TheStreet) -- Shares of Activision Blizzard (ATVI) are up 1.12% to $21.72 as reviews fueled Pacific Crest analysts' optimism on the commercialization potential of its Call of Duty Online video game in China.
Call of Duty Online is currently the most anticipated upcoming game on Tencent's gaming portal, analysts said, citing approximately 3,700 reviews on games.qq.com that yielded a 9.5 user rating out of 10.
"After reading consumer reviews of the closed beta version, we are much more optimistic it will be a success," analysts said about the game set to release in China on January 11, 2015.
"Monetization will be modest in Q1 as you would expect from a free-to-play game, but if Call of Duty Online could grow to be as big as CrossFire, it could contribute as much as 30 cents to Activision's annual EPS," analysts added.
Separately, TheStreet Ratings team rates ACTIVISION BLIZZARD INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ACTIVISION BLIZZARD INC (ATVI) a HOLD. The primary factors that have impacted our rating are mixed--some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."
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 27.60%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- ATVI's revenue growth trails the industry average of 26.7%. Since the same quarter one year prior, revenues slightly increased by 9.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- ATVI's debt-to-equity ratio of 0.62 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. Despite the fact that ATVI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.14 is high and demonstrates strong liquidity.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Software industry and the overall market, ACTIVISION BLIZZARD INC's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$145.00 million or 190.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: ATVI Ratings Report