Activision Blizzard (ATVI): Overwatch Blowout - Mizuho
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Mizuho Securities analyst, Neil Doshi, reiterated his Buy rating on shares of Activision Blizzard (NASDAQ: ATVI) after the company reported revenue of $1.61b, surpassing Street expectations by 11%, and non-GAAP EPS of $0.54 was significantly higher than Street estimates of $0.42. EPS came in $0.16 above guidance of $0.38 as ~$0.04 was due to cost timing and $0.12 from business over performance.
The analyst stated that "Overwatch is a key reason for record digital revenue, in our opinion. Since its May debut, Overwatch now has 15m players globally, balanced between the East & West, and is now bigger than the coveted MOBA League of Legends. Furthermore, Blizzard has been releasing new content each month since the game’s release, and that strategy seems to be driving engagement and digital revenue. In 2Q, ATVI posted digital revenue of $1.4b, up 129% YoY, and a record for the company. In turn, op. margins edged up to a record 37% vs. 28% in 1Q".
The price target increases to $46.00 (from $42.00) as 2016 revenue increases 3% to $6.50b and EPS goes from $1.80 to $1.95. However, the analyst also raised the target PE multiple to reflect the strong momentum for the company's portfolio of games.
Shares of Activision Blizzard closed at $40.83 yesterday.
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