Wall Street Analysts Change Price Targets on Apple Inc. (AAPL) and Activision Blizzard, Inc. (ATVI); Here’s Why

Following analyst departure and disappointing earnings report, brokerage firms FBR and UBS have made changes to price targets on tech giant Apple Inc. (NASDAQ:AAPL) and video game maker Activision Blizzard, Inc. (NASDAQ:ATVI), respectively. Below are the changes along with current ratings and comments from lead analysts Christopher Rolland and Eric Sheridan.

Apple Inc.

Following the departure of analyst Daniel Ives, FBR is transferring coverage of Apple to Christopher Rolland, Senior Analyst, Semiconductor Devices and Hardware. After taking the lead, Rolland issued a new price of $120 (from $130), while reiterating an Outperform rating on the stock.

Rolland commented, “Our Outperform rating lies in Apple’s numerous hard-warring competitive advantages including (1) integrated software/hardware, (2) a growing and sticky ecosystem outside of handsets/PC, and (3) world-class cache and brand. Additionally, we think the shares are well supported by an inexpensive valuation.”

“While Apple’s hypergrowth years are likely in the rearview mirror, we view the latest downdraft in iPhone shipments as potentially temporary, with the launch of the iPhone 7 a truer test of Apple’s prowess. We believe handset sell-through has been affected by a slowdown in generational product innovation, which has led to a lengthening of the handset replacement cycle. If Apple’s next-generation handset were to offer innovation that compelled consumer upgrades, this viscous lengthening of this cycle would work in the reverse, likely driving meaningful unit growth once again,” the analyst concluded.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Christopher Rolland has a yearly average return of 2.8% and a 48.7% success rate. Rolland is ranked #613 out of 3564 analysts.

Out of the 53 analysts polled by TipRanks, 40 rate Apple stock a Buy, 10 rate the stock a Hold and 3 recommend a Sell. With a return potential of 47%, the stock’s consensus target price stands at $137.91.

UBS analyst Eric Sheridan reiterated a Buy rating on shares of Activision Blizzard, while reducing the price target to $36 (from $44), after the company provided disappointing guidance, sending shares down nearly 11% this morning.

Sheridan commnened, “Despite a strong quarter for the Call of Duty franchise, ATVI’s Q4 results & forward guidance fell short of expectations as the company’s casual titles (Skylanders & Guitar Hero) underperformed and a Destiny sequel was shelved until 2017 (vs. expectations for 2016). That said, stronger than expected next-gen console revenues (+77% YoY vs. UBSe +55%) & continued mix shift towards digital suggest industry tailwinds persist – as a result, our outlook for continued margin expansion & improved FCF generation remains unchanged.”

“In the near-term, we expect investors to look to the KING acquisition and the launch of the Overwatch title as key drivers for upside to 2016 expectations. Notably, while management’s prepared remarks suggest a keen focus on the eSports & media/film opportunities, investment levels appear measured at present and are unlikely to drive medium-term performance,” the analyst added.

According to TipRanks.com, analyst Eric Sheridan has a yearly average return of 5.3% and a 53% success rate. Sheridan has a 14.6% average return when recommending ATVI, and is ranked #411 out of 3564 analysts.


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