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ACTIVISION BLIZZARD, INC.

(ATVI)
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Videogame publishers hope thrill remains after blockbuster 2020

05/04/2021 | 12:21pm EDT
FILE PHOTO: The Activision booth is shown at the E3 2017 Electronic Entertainment Expo in Los Angeles

(Reuters) - The big question for U.S. gaming companies when they report results in the coming days is whether players will remain hooked on "Call of Duty", "Grand Theft Auto" and "NBA 2K21" after life returns to some normalcy following vaccine rollouts.

Huge demand during the pandemic for game titles propped up results for Electronic Arts Inc, Activision Blizzard Inc and Take-Two Interactive Software Inc over the past few quarters. Most analysts are bullish and think the sales momentum can be sustained; some are a bit more skeptical.

John Patrick Lee, ETF Product Manager at VanEck, said "return to normalcy risk" is a very real risk to the video game market right now, with widespread vaccinations and lowering case counts in some countries.

"This could potentially mean that restaurants, bars, movie theaters, sports events, and other options are going to take video game consumers away from the digital world and into the real world."

THE CONTEXTThe video gaming industry has seen a surge in sales over the past year as gamers remained indoors, but with the roll-out of COVID-19 vaccines and easing of restrictions, people are venturing outdoors.

The gaming frenzy drove worldwide console sales to a record $56 billion in 2020. High demand also fueled a global shortage in semiconductor chips that has roiled the industry.

Moreover, publishers also need to keep refreshing their top-selling titles such as "Overwatch", "Battlefield" and "Grand Theft Auto" to attract new gamers and retain old ones, as they face fierce competition.

Activision, which is expected to report after the market close on Tuesday, is anticipated to post a rise in revenue as it continued to benefit from its popular title "Call of Duty: Black Ops Cold War".

Similarly, analysts expect EA to also come out with a strong picture after its acquisitions of Codemasters, the publisher behind top racing titles like "F1" and "Dirt", and the "Kim Kardashian: Hollywood" creator Glu Mobile.

"Video games are as popular as ever. We don't see that changing any time soon," Jefferies analysts wrote in a note.

THE FUNDAMENTALS

* The Redwood City, California-based EA is expected to report a 14.5% increase in revenue to $1.39 billion from $1.21 billion a year ago, according to the mean estimate from 27 analysts, based on Refinitiv data.

* Analysts expect Santa Monica, California-based Activision Blizzard to show a rise of 17% in first-quarter revenue to $1.78 billion from $1.52 billion, a year ago.

* However, New York-based Take-Two is expected to report a 9.0% decrease in revenue to $664 million from $729.42 million last year, according to Refinitiv data.

WALL STREET SENTIMENT

* The average rating of 34 analysts on Electronic Arts is "buy" and median PT is $162, according to Refinitiv data.

* Wall Street is mostly bullish on Activision Blizzard with 29 analysts rating the stock "buy" or above, 4 "hold" and 1 "strong sell"; median PT is $115.

* Current rating of 29 analysts on Take-Two is "buy" and median PT is $223, according to Refinitiv data.

QUARTER STARMINE REFINITIV IBES ACTUAL BEAT, SURPRISE

ENDING SMARTESTIMATE® ESTIMATE MET, %

MISSED

Activision Blizzard Inc

Dec. 31 1.19 1.18 1.21 Beat 2.7

2020

Sep. 30 0.66 0.65 0.71 Beat 9.8

2020

Jun. 30 0.72 0.69 0.97 Beat 41.6

2020

Mar. 31 0.39 0.38 0.58 Beat 53.6

2020

Electronic Arts

Dec. 31 2.98 2.96 3.06 Beat 3.4

2020

Sep. 30 0.08 0.02 0.05 Beat 102.1

2020

Jun. 30 0.82 0.79 1.42 Beat 80.5

2020

Mar. 31 0.99 0.98 1.08 Beat 10.2

2020

Take-Two Interactive Software Inc

Dec. 31 1.02 0.96 1.25 Beat 30

2020

Sep. 30 1.55 1.48 2 Beat 34.8

2020

Jun. 30 1.62 1.6 2.3 Beat 43.9

2020

Mar. 31 0.92 0.89 1.5 Beat 67.7

2020

(Reporting by Tiyashi Datta and Akanksha Rana, Writing by Subrat Patnaik; Editing by Bernard Orr)

By Tiyashi Datta and Akanksha Rana


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
ACTIVISION BLIZZARD, INC. 2.36% 95.35 Delayed Quote.0.34%
ELECTRONIC ARTS INC. 0.73% 141.7 Delayed Quote.-2.05%
TAKE-TWO INTERACTIVE SOFTWARE, INC. -0.84% 167.51 Delayed Quote.-18.66%
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Financials (USD)
Sales 2021 8 724 M - -
Net income 2021 2 402 M - -
Net cash 2021 7 722 M - -
P/E ratio 2021 30,5x
Yield 2021 0,48%
Capitalization 72 395 M 72 395 M -
EV / Sales 2021 7,41x
EV / Sales 2022 6,26x
Nbr of Employees 9 500
Free-Float 63,3%
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Technical analysis trends ACTIVISION BLIZZARD, INC.
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Income Statement Evolution
Consensus
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Mean consensus BUY
Number of Analysts 36
Average target price 114,72 $
Last Close Price 93,17 $
Spread / Highest target 35,2%
Spread / Average Target 23,1%
Spread / Lowest Target -8,77%
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Managers and Directors
NameTitle
Robert A. Kotick Chief Executive Officer & Director
Daniel I. Alegre President & Chief Operating Officer
Armin Zerza Chief Financial Officer
Brian G. Kelly Chairman
Frances Fragos Townsend Secretary, Chief Compliance Officer & Executive VP
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