Piper Jaffray Raises Price Target on Activision Blizzard (ATVID) to $40

August 1, 2008 10:45 AM EDT

Piper Jaffray raises its price target on Activision Blizzard (Nasdaq: ATVID) from $36 to $40. The firm reiterates a Buy rating.

The firm cites Activision's strong Q2 earnings, which were reported yesterday after the close, and guidance for the September and December quarters that was above Piper's estimates. Piper believes that updated CY09 guidance for the combined Activision-Blizzard will be issued with its September quarter.

Piper raised its combined estimate for Activision Blizzard's CY09 sales from $5.11 billion to $5.37 billion, while its EPS estimate stayed at $1.55. Notably, the firm believes that these estimates "will likely move much higher."

Piper says its higher price target on Activision Blizzard is the result of a higher target multiple: now based on 26x the firm's CY09 EPS estimate, up from 23x. The firm said the increase was "due to quarter outperformance, increased estimates, improving execution, and our expectation that our CY09 EPS estimates will likely move much higher."

Shares of Activision Blizzard are down about 5% to around $34 this morning. Based on today's price, Piper's $40 price target represents potential upside of more than 17%.

Activision Blizzard, Inc. operates as an online and console game publisher.

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