Wedbush analyst Michael Pachter was out with a favorable report on shares of video game maker Activision Blizzard, Inc. (NASDAQ:ATVI), reiterating an Outperform rating and raising the price target to $48 (from $43), which implies an upside of 17.5% from current levels. The report follows the company’s second quarter results, where revenues of $1.61 million beat consensus expectations. Non-GAAP EPS of $0.54 was also well above consensus of $0.41, driven by the strong Digital segment growth and outperformance.
Pachter commented, “We believe Activision Blizzard could earn well in excess of $3.00 by 2018 should it capture King’s untapped advertising opportunity and deal synergies, suggesting its stock is significantly undervalued.”
The analyst continued, “We are raising our FY:16 revenue estimate to $6.5 billion from $6.4 billion to reflect the Q2 upside, and are raising our EPS estimate to $2.05 from $1.96. Our estimates reflect Q3 guidance, and incorporate a slight revenue and profit decline (after factoring in contribution from King) for Q4; we believe that this approach is appropriately conservative, as it takes into account a crowded holiday release schedule that could pressure sales of Activision’s flagship Call of Duty game.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Pachter has a yearly average return of -1.7% and a 50.2% success rate. Pachter has a 35.7% average return when recommending ATVI, and is ranked #3482 out of 4090 analysts.
Out of the 19 analysts polled by TipRanks, 16 rate Activision Blizzard Inc stock a Buy, while 3 rate the stock a Hold. With a return potential of 6.2%, the stock’s consensus target price stands at $43.39.