The Hot Stock: Activision Blizzard Soars 19%

Activision Blizzard(ATVI) soared to the top of the S&P 500 today after beating earnings and sales forecasts, and initiating a $1 billion stock buyback plan.

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Activision Blizzard gained 19% to $47.23 today, while the S&P 500 rose 0.4% to 2,316.10.

Credit Suisse analyst calls Activision Blizzard’s results “another clean top and bottom-line beat.” They explain:

Activision delivered another clean top and bottom-line beat with the outperformance relative to our estimates coming primarily from PC – this coupled with the fact that revenue from APAC was up ~83% in FY16 leads us to believe that Overwatch likely was the main driver. This fits in squarely with our core investment thesis for not only Activision but the sector as a whole – for all of the publishers to begin exporting their content beyond Western Markets and expand their addressable markets. Blizzard also saw benefit from ongoing strength in World of Warcraft following the Legion expansion and despite the original game being ~3 years old the Candy Crush franchise grew mobile bookings in 2016. We were not anticipating major changes to the release slate for FY17 as we expect it to be a trough product year – we were again encouraged by the broad based strength in digital revenues as we believe Activision is well positioned to extract more value from its existing user base. We maintain our Outperform rating and our price target increases to $51 vs. prior $48.

Activision Blizzard’s market capitalization rose to $35.1 billion today from $29.5 billion yesterday.