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Is Activision Blizzard Stock Attractive following Its Fall?

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ATVI is trading close to its 52-week low

Activision Blizzard (ATVI) stock has fallen 32% over the last 40 days or so to end up at $56.6 on November 8. Investors were unimpressed with the company’s fourth-quarter revenue guidance, its Call of Duty: Black Ops 4 sales, and its Diablo Immortal announcement, leading to the steep fall in its stock.

Does this mean that ATVI has bottomed out? It definitely seems like it. Activision Blizzard is one of the top gaming companies in the world. It has a compelling gaming portfolio and has user engagement across platforms. The company is also an early entrant into the esports market.

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Revenue growth

Despite ATVI’s recent stock price decline, its long-term revenue growth remains solid. Analysts expect the company’s sales to rise 4.6% to $7.48 billion in 2018, 5.9% to $7.92 billion in 2019, and 9.3% to $8.65 billion in 2020.

The company’s EPS are expected to rise to 15.8% in 2018, 11% in 2019, and at a CAGR (compound annual growth rate) of 14.3% over the next five years. The EPS of peer gaming companies Electronic Arts (EA), Zynga (ZNGA), and Take-Two Interactive (TTWO) are estimated to rise at CAGRs of 13%, 30%, and 24.5%, respectively, over the next five years.

Analysts’ price target estimates

Of the 27 analysts tracking ATVI, 20 have given it “buys,” seven have given it “holds,” and none have given it “sells.” Analysts’ 12-month average target price for ATVI is $81.92, while the median estimate is $82. ATVI is trading at a discount of 45% to analysts’ median estimate.

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