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  • Activision Blizzard shares: 17% growth amid record-high sales of video games

Activision Blizzard shares: 17% growth amid record-high sales of video games

Company Name: Activision Blizzard Inc.
Ticker symbol: ATVI.US
Entry price: $91,5
Target price: $107
Potential: 17%
Horizon: 3–6 months
Deadline: May 04
Risk: high
Position size: 1-2%

Information on Activision Blizzard

Activision Blizzard Inc. (ATVI) is one of the largest American publishers and developers of computer games, producing and distributing gaming and entertainment content for game consoles, personal computers and mobile devices worldwide. The company owns such world-famous franchises as Call of Duty, World of Warcraft, Diablo, Hearthstone, Overwatch and Candy Crush. In addition, the company manages eSports leagues, and provides services to third parties for the production and distribution of their content.

What is the idea?

To make money on shares which may grow after the publication on May 4 of the financial reports for the 1st quarter.

Buy Activision Blizzard Inc. Shares >>

Why do we like Activision Blizzard?

Reason 1: record sales in the video game market

In March 2021, American gamers spent over $5,6 billion buying video games, game consoles and accessories. Compared to March 2020, the growth is 18%. COVID-19 has been a driver of the growth in the gaming industry and, a year into the lockdown, the market continues to expand. According to the latest data of the NPD Group, the total market since the beginning of 2021 is $14,92 billion, which is 30% more than during the same period last year. At the same time, content sales have grown by 25% to $12.8 billion since the beginning of the year. The Call of Duty: Black Ops Cold War game by Activision Blizzard once again tops the ratings.

Reason 2: high expectations of the financial reports to be published for the 1st quarter of the year

On average, Wall Street estimates that Activision Blizzard will report a profit of $1,77 billion and earnings per share growth of 0,69%. Thus, the growth projection is 19,5% compared to the same period last year.

Many investment banks have raised their target price for ATVI shares.

Stifel – target price $119

On May 5, Stifel expects a positive report to be published, which is why it has raised the target price of Activision Blizzard to $119. Overall, ATVI shares are one of the investment ideas of the company. According to the analysis, all the leading franchises of Activision Blizzard, including Call of Duty, World of Warcraft and Candy Crush Saga, have demonstrated promising results in the 1st quarter. "This, together with the comments of the management at the end of the period which have confirmed the growth of the profit, gives us additional confidence in our short-term assumptions", claims the company. The fundamental indicators in 2022 is thus optimistic.

Jefferies – target price $120

"We don't see that the trend would change anytime soon; we expect that the $175 billion industry will continue to grow in double digits over the next five years," claims Jefferies. Despite fears that stay-at-home stocks will soon decline with the economic recovery, Jefferies hopes that the position of the major publishers will remain "strong."

"New business models, better and more sophisticated monetisation mechanisms, platform convergence and continuous technology development in the long-term perspective are in favour of interactive media," the company said. Jefferies maintains an Activision Blizzard Buy rating with a $120 target price and evaluates ATVI products as best in its class. At the same time, analysts are confident that, as ecosystems are created, the company will continue its development by increasing the audience and extending the life cycle of the product.

KeyBanc - target price $120

The company still prioritises Activision Blizzard, expecting its franchise strategy to continue growing through the ever more extensive number of premium franchises. The company's target price is $120.

Benchmark - target price $120

Benchmark has raised its Activision Blizzard target price to $120 and still recommends buying ahead of the company's expected 1st quarter report. Benchmark believes that Activision will perform better than the consensus forecast predicts, given a possible conservative scenario in the 2nd quarter. Benchmark maintains its positive opinion for the financial year of 2021.

Potential risk

If the financial reports are still adverse and do not meet analysts' expectations, the share is likely to adjust by 5-6% to the level of $88-89.

How can you take advantage of the idea?

  1. Buy Activision Blizzard shares for $91,5 until May 4.
  2. Allocate no more than 1-2% of the amount of your portfolio. To ensure a balanced portfolio, you can utilise the recommendations by our analysts. 
  3. Sell when the price reaches $107.

How to Buy Activision Blizzard Inc.?

If you don't have an investment account yet, open it now: this can be done online, in just 10 minutes. All you need to do is fill out a short form and verify your account.

After opening an account, you can buy shares in either of the following ways:

Freedom24 Web Platform: In the Web Terminal section, type ATVI.US (Activision Blizzard Inc. ticker in the NASDAQ) in the search box, and select Activision Blizzard Inc. in the results. Open a secure session in the trading window on the right, select the number of shares you want to buy, and click Buy.

Freedom24 iPhone or Android App: Go to the Price screen and tab the search icon in the top right corner. In the search dialog that will show up, type ATVI.US (Activision Blizzard Inc. ticker in the NASDAQ) and select Activision Blizzard Inc. in the search results. You will then see the stock in the market watch; tap it and go to the Order tab in the dialog that shows up. Specify the number of shares you want to buy and click Buy.

Buy Activision Blizzard Inc. Shares >>

*Additional information is available upon request. Investment in securities and other financial instruments always involves risks of capital loss. The Client should make himself aware at his own accord, including to familiarize himself with Risk Disclosure Notice. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Commissions, fees or other charges can diminish financial returns. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and do not constitute an investment advice service. The recipient of this report must make their own independent decisions regarding any securities or financial instruments mentioned herein. Information has been obtained from sources believed to be reliable by Freedom Finance Cyprus Ltd or its affiliates and/or subsidiaries (collectively Freedom Finance). Freedom Finance do not warrant its completeness or accuracy except with respect to any disclosures relative to the Freedom Finance and/or its affiliates and the analyst’s involvement with the issuer that is the subject of the research. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated.