BMO: Activision-Blizzard Reigns Over Gaming Space

- February 25th, 2020

Analysts at BMO have tagged Activision-Blizzard as their top pick in the gaming space due to some strong engagement with CoD: Modern Warfare.

Due to some strong engagement with one of its most popular titles, Call of Duty: Modern Warfare, analysts at BMO Capital Markets have tagged Activision-Blizzard (NASDAQ:ATVI) as their top pick in the gaming space currently.

In a note sent out on Monday (February 24), Gerrick Johnson, director at BMO Capital Markets, said the game developer has earned an “outperform” rating with a price target of US$70.

It represents a significant upside from the company’s current share price of US$60.28 as of 1:00 p.m. EST on Tuesday (February 24).

Earlier this month with the release of its Q4 and full-year 2019 results, Activision reported that it beat its own estimates, raking in nearly US$2 billion in generally accepted accounting principles net revenues, up from the US$1.8 billion projected in a previous outlook.

According to the fiscal report, Call of Duty: Modern Warfare continued to be one of the firm’s major cash cows as unit sales for the game rose by double-digit percentages compared to another title in the series, Call of Duty: Black Ops 4.

The latest installment in the Call of Duty series also saw strong growth in full-game downloads with a console digital mix of approximately 50 percent.

“We ended the year with over 400 million monthly active users, strong year-over-year engagement and significant potential in monetization,” CEO Bobby Kotick said during an earnings call with investors.

Another of the offerings in the Call of Duty line, Call of Duty Mobile, also proved to be largely successful, helping to increase Activision’s player base from 40 million to over 100 million within the year.

The popular franchise also got a boost from its recent launch into the esports world with the introduction of the Call of Duty League earlier in 2020.

Another of Activision’s well-loved titles, the team-based shooter Overwatch, has established itself as a leading event to follow in the esports scene. The 2020 season of the popular Overwatch League kicked-off in February.

EA puts up impressive numbers, Take-Two leads to concerns based on glitchy game

Elsewhere in the gaming universe, fellow gaming competitors Electronic Arts (EA) (NASDAQ:EA) and Take-Two Interactive (NASDAQ:TTWO) were also highlighted by BMO.

In the note, Johnson told investors the firm was rating EA as “market perform” with a US$110 target price.

Thanks to the unprecedented success of the recently released Star Wars Jedi: Fallen Order game, share prices have been up 5.23 percent since the end of November, a few weeks after the game was released. Currently, shares of the video game publisher sit at US$106.34 as of 2:05 p.m. EST.

The title was met with acclaim, and, shortly after its release, EA named it a critical darling having sold more digital downloads than any other games in the Star Wars franchise in the first two weeks of its availability.

Johnson said the firm was a bit more cautious about its outlook for the New York-based Take-Two, despite impressive results from the ever-popular Grand Theft Auto series.

The firm sees instability in the future for Take-Two, attributed to a rocky launch for NBA 2K20 — the latest installment in the popular basketball series — which was fraught with bugs when it was first released back in September 2019.

Johnson said BMO has Take-Two listed as “market perform” as well, with a price target of US$120.

Take-Two has taken some hits to its value. In the last six months, shares prices have dipped nearly 15 percent in the open market. Take-Two started the trading day on Tuesday (February 25) at US$113.56.

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Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.

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