Is ATVI Stock a Buy After Activision Blizzard Earnings? 3 Analysts Weigh In.

Activision Blizzard (NASDAQ:ATVI) reported Q1 earnings today, and ATVI stock is currently in the red as a result. Revenue came in at $1.77 billion, missing analyst expectations of $1.82 billion by about 3%. Meanwhile, adjusted earnings per share (EPS) tallied in at 64 cents, which missed estimates of 71 cents by about 10%.

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Last January, Microsoft (NASDAQ:MSFT) agreed to buy the video game company for $69 billion, or $95 per share. The transaction is expected to close by June of next year and has been approved by the boards of both companies. However, the transaction is still pending federal regulatory approval.

ATVI Stock: Activision Blizzard Reports Q1 Earnings

In a press release, Activision stated, “Financial performance declined year-over-year, primarily reflecting lower results for Call of Duty and product cycle timing at Blizzard, offsetting robust growth at King.” The company also saw an “increase in legal and other professional fees” due to its potential acquisition by Microsoft.

Last year, Activision was accused of harboring a poor workplace environment and was sued by California’s civil rights agency. The agency claimed the company engaged in a culture that caused widespread sexual harassment toward women. Activision responded by firing 20 unnamed employees and by reaching an agreement with the U.S. Equal Employment Opportunity Commission (EEOC). The agreement states that the company will expand its ethics and compliance team and create an $18 million fund to compensate complainants. Federal courts approved the fund last month.

With that in mind, let’s take a look at how analysts feel about the video game company.

3 Analysts Weigh in on Activision Blizzard

  • Benchmark has a price target of $100. Analyst Mike Hickey believes that the company can see growth in 2022 with support from key games, such as Modern Warfare 2 and Candy Crush. Hickey also believes that the Microsoft acquisition has created a “valuation floor” for the company. On the other hand, the analyst still believes that 2023 will be a strong year for Activision, even if the Microsoft acquisition is rejected by the Federal Trade Commission (FTC).
  • Truist has a price target of $95. Analyst Matthew Thornton raised his price target from $74 to $95 to be in line with the Microsoft acquisition price. The analyst’s sum of the parts (SOTP) analysis valued the company at between $90 and $97 per share. Furthermore, Thornton believes the acquisition will be positive for other video game companies, like Electronic Arts (NASDAQ:EA) and Take-Two (NASAQ:TTWO).
  • Stifel has a price target of $77. Activision was removed from Stifel’s Select List last December. Analyst Drew Crum believes that “reward-to-risk is better to the upside, at least over the intermediate-term.” For 2022, Crum expects adjusted EPS for 2022 to tally in at $3.95.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


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