Activision Blizzard (ATVI) PT Raised to $32 at Brean Capital Amid Strong Q2
Brean Capital analyst Todd Mitchell reiterated a Buy rating and raised his price target on Activision Blizzard (NASDAQ: ATVI) to $32.00 (from $30.00) following strong result after the close. The analyst said current trends give us greater confidence in Activision’s potential upside.
Mitchell commented, "Activision reported upside to 2Q15 guidance and, for the second quarter in a row, raised its full year guidance for net revenue and non-GAAP EPS. New guidance is for net revenue of $4.6 billion and non-GAAP EPS of $1.30, up from a prior outlook of $4.425 billion and $1.20. We continue to believe that increasing traction for Blizzard’s F2P titles, which drove much of the upside to 2Q15, points to the potential for upside to these numbers and an emerging business model which is higher margin and less seasonal despite expectations for lower revenue from World of Warcraft, which has lost 45% of its user base since the start of the year. We note that digital revenue made up 79% of all non-GAAP revenue year-to-date, up from 70% in the prior year. We expect this mix to be supported in the second half through growing micro-transactions for Blizzard titles, higher FGDL rates for AAA console titles and Destiny’s mega DLC Taken King. As a result, we are raising our target price to $32 from $30 and reiterate our Buy rating."
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Shares of Activision Blizzard closed at $25.67 yesterday.