Activision Blizzard, Inc. (NASDAQ:ATVI) — This large-cap growth stock results from the mergers of home entertainment software company Activision and Vivendi Games. These mergers, along with the acquisition of King Digital (Candy Crush franchise), resulted in making what was a U.S.-focused producer of game software into a worldwide developer and producer of interactive entertainment products.
Standard & Poor’s upgraded ATVI stock to its highest rating, a five-star strong buy, following third-quarter results that exceeded analysts’ expectations. ATVI reported Q3 earnings of 26 cents and is expected to produce 78 cents in Q4 and has a $2.05 EPS estimate for 2016, up from $1.19 in 2015. S&P’s 12-month target is $52. They consider the current pullback as “an enhanced buying opportunity.”
Technically ATVI double-topped at about $45 in October and fell to a low of under $36 in December. It appears to have established a triple bottom there, breaking from a support zone of $35.50 to $38, formed from December to January.
On Friday a trading buy was flashed when the 20-day moving average crossed above the 50-day moving average; however, volume was below average and MACD is overbought. Thus, try to buy ATVI at $38 with a 90-day trading target of $45 for a proposed gain of over 18%.
The fall from a high of $45.45 also provides an opportunity for long-term investors to position this representative of the Home Entertainment Software sub-group of the Information Technology Sector for S&P’s larger long-term target of $52.
The next annual earnings report is expected in mid-February.
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