Shares of Activision Blizzard Inc. (ATVI) reached a new 52-week high of $22.63 on Jul 1, 2014. The bullish run reflects Activision’s strong first-quarter results, innovative product pipeline and positive outlook.
The closing price of Activision Blizzard on Jul 2 was $22.55, representing a strong one-year return of about 57.5% and a year-to-date return of about 24.8%. The S&P 500 jumped 22.3% and 7.7%, respectively, during the same period. Average volume of shares traded over the last three months stands at approximately 6744.2K.
Activision Blizzard delivered a positive average earnings surprise of 245.7% over the past four quarters. This Zacks Rank #2 (Buy) stock has a market cap of $15.96 billion and a long-term expected earnings growth rate of 15.9%.
Key Growth Catalysts
We believe that Activision’s innovative product pipeline is the key growth catalyst. The company showcased an enviable line-up of upcoming titles in the recently concluded Electronic Entertainment Expo (E3). This included the most anticipated game Destiny, the new installment of Call of Duty franchise — Call of Duty Advanced Warfare — and new the Skylander’s game — Skylanders Trap Team.
The availability of new games on Microsoft’s (MSFT) and Sony’s (SNE) new consoles will further boost Activision’s top line in 2014. Management forecasts full-year 2014 revenues to be $4.68 billion based on strong performance by its major franchises and expected higher consumer spending on new consoles. The company expects earnings of $1.27 per share.
We believe that this strong games pipeline will help Activision counter intensifying competition in the video game market, going forward.
Estimate Revision
The Zacks Consensus Estimate for 2014 has remained steady at $1.19 per share over the past 30 days. For fiscal 2015, the earnings estimate increased 2 cents (1.5%) to $1.37 per share over the same period.
Other Stocks to Consider
Another better-ranked stock that develops and publishes video games is Electronic Arts (EA) sporting a Zacks Rank #1 (Strong Buy).
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