28 May

ATVI Surges after Goldman Sachs Says It’s Game

WRITTEN BY Mohit Oberoi, CFA

ATVI

Activision Blizzard (ATVI) is trading with a gain of 3.4% as of 12:10 PM EDT, outperforming other gaming stocks as well as the NASDAQ Composite Index (QQQ).

Electronic Arts (EA) and Take-Two Interactive Software (TTWO) are up 1.0% and 1.8%, respectively, as of the same time.

ATVI Surges after Goldman Sachs Says It’s Game

ATVI received a boost today after Goldman Sachs upgraded the stock from a “neutral” to a “buy” and added it to its Americas Conviction List. Goldman Sachs sees “a potential inflection in ATVI’s earnings trajectory” and has cited the company’s new content releases, yet-to-be-released titles, and potential for franchise monetization in support of its bullish thesis. Gaming stocks have been out of favor with the markets for quite some time now.

Apple (AAPL) and Microsoft (MSFT) have also recently raised their bets on the sector. If we look at its price action, we can see that ATVI is negative for the year. Electronic Arts has outperformed its peers, as the markets have rerated it following the success of its free-to-play game Apex Legends.

Analysts’ ratings

Activision Blizzard has received “strong buy” ratings from seven analysts, while 15 have rated it as a “buy” or some equivalent. The remaining 12 analysts polled by Thomson Reuters have rated ATVI as a “hold.” The stock has received a mean consensus price target of $52.89, which represents a potential upside of almost 20%. Electronic Arts and Take-Two Interactive Software are trading 19% and 13% below their price targets, respectively.

Activision Blizzard released its earnings results earlier this month and saw a selling spree thereafter. Some analysts lowered the stock’s target price following its earnings release. Read How Analysts Rate Activision Blizzard following its Q1 Earnings to learn more.

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