Activision Blizzard (ATVI): A Great Outlook Despite Lowered Guidance

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Activision Blizzard, Inc. (NASDAQ:ATVI) — the creators of beloved franchises such as Call of Duty, World of Warcraft and Skylanders — astonished no one earlier this month when annual revenues clocked in at $4.8 billion, a mere 3% short of their most successful year (2012).

Activision Blizzard (ATVI): A Great Outlook Despite Lowered GuidanceActivision Blizzard was forced to acknowledge the burden a strong U.S. dollar could have on overseas sales, and bearish investors initially sold ATVI off hard after the company lowered 2015 guidance.

However, ATVI ended the day of post-earnings trading with positive results and witnessed an increase in trading volume throughout the week.

Just like Activision shook off a mixed report, I think ATVI stock will shrug off a strong dollar and stiff competition. Here are four reasons why you should believe in this gamemaker:

  • While ATVI is known for releasing highly conservative guidance, a soft fiscal 2015 outlook will only ensure the 10-year ongoing streak that ATVI has of beating expectations, according to Wedbush Securities analyst, Michael Pachter.
  • ATVI stock should continue to experience long-term growth, as its portfolio of five high-budget franchises is expected to double by the end of the year, which should in turn generate a lot more revenue.
  • Following up on the recent success of Destiny, which racked up $500 million in sales on its first day alone, ATVI plans to boost growth by providing both Destiny and Call of Duty fans with newly downloadable content, which should help bolster digital sales. ATVI also is expected to release fresh content for its widely popular card game, Hearthstone, and the equally beloved Diablo franchise, Furthermore, in addition to a few “unannounced initiatives” planned for 2015, the Call of Duty franchise is expected to continue its annual tradition of a new November launch.
  • Blizzard bred a loyal fanbase with its best-selling, massively multiplayer online role-playing game, World of Warcraft. Well, the company just rejuvenated the franchise as Blizzard Entertainment welcomed more than 10 million subscribers with the launch of the Warlords of Draenor expansion back in November. This uplifting news will provide upward momentum for ATVI stock as long as consumers remain enthusiastic.
  • Lastly, to ensure long-term shareholder value, Activision Blizzard plans to pay down its debt, buy back shares and raise dividends. ATVI raised its dividend, paid annually, to 23 cents per share — a very modest 1% yield on current prices. Moreover, Activision announced a $750 million stock repurchase plan and a $250 million debt paydown.

Bottom Line

ATVI has proven itself an entrenched competitor in the space along the likes of Electronics Arts Inc. (NASDAQ:EA) and Take-Two Interactive Software, Inc. (NASDAQ:TTWO), and is the largest and most profitable independent interactive entertainment publishing company in the world.

With all these drivers booting up in Activision’s favor, investors should join the game and buy ATVI stock for continued shareholder value.

As of this writing, Anna Rider did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/02/activision-blizzard-atvi-a-great-outlook-despite-lowered-guidance/.

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