Activision Blizzard (NASDAQ: ATVI) shares are trading near an all-time high, and as long the price is above $80, this stock remains in a bull market. Morgan Stanley raised its price target to $108 on Activision Blizzard, while J.P. Morgan expects that the whole sector will increase sales in the upcoming months.
Fundamental analysis: Video game sales jumped to a new record in December, and this trend should continue
Activision Blizzard, Inc. is an American video game holding company with five business units: Activision Publishing, Blizzard Entertainment, King, Major League Gaming, and Activision Blizzard Studios. Activision Blizzard shares are trading near record level, supported by the news that videogame sales jumped to a new record in December.
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Activision Blizzard reported Q3 results in the last week of October; total revenue has increased by 46.3% Y/Y to $1.77B while Q3 GAAP EPS was $0.78 (beats by $0.16). Total revenue has risen above the expectations (+$70M), but the company had significantly lower cash flow than expected and a decline in users from Q2.
The company raised its expectations for the full year and expected non-GAAP earnings per share of $3.08 (previously $2.87) and revenues of $7.67B (previously $7.25 billion).
Activision Blizzard is handling the coronavirus threat very well, and it is attracting investors’ attention in this uncertainty on the financial markets. MKM Partners raised its price target on Activision Blizzard to $105 from $100 on expectations for more growth drivers ahead.
“Activision Blizzard remained enthusiastic about growth prospects and attributed the performance to the good execution of Activision Blizzard’s teams. During the lockdown, other forms of entertainment (like sports and movie theaters) remain stalled because of social distancing and shelter-in-place orders during the pandemic. With few other options, more people than ever are turning to video games,” said Activision Blizzard CEO Bobby Kotick.
J.P. Morgan is also bullish on Activision Blizzard, and it expects that the whole video game sector will increase sales in the upcoming months. Morgan Stanley raised its price target to $108 for ATVI, and Activision Blizzard remains its top gaming pick for 2021.
The video game sector remains a substantial area of growth, and even as the end of the coronavirus comes into sight, more consumers are expected to retain this habit. Technically looking, Activision Blizzard shares could advance above $100 resistance this January, but with a $70B market capitalization, this stock is expensive, in my opinion.
Technical analysis: The first sign of the trend reversal could be if the price falls below the $80 support
Activision Blizzard shares remain in the bull market, and the first sign of the trend reversal could be if the price falls below the $80 support.
The critical support levels are $80 and $70; $95, $100, and $105 represent the resistance levels. If the price jumps above $95, it would be a signal to buy shares, and the next target could be around $100 or even $105.
If the price falls below the $80 support level, it would be a firm “sell” signal, and the price could fall to $70.
Summary
Activision Blizzard shares are trading near an all-time high, and the company remains enthusiastic about growth prospects. Morgan Stanley raised its price target to $108 on Activision Blizzard, while J.P. Morgan expects that the whole sector will increase sales in the upcoming months.
