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Video game publisher Activision Blizzard ( ATVI ) late Thursday missed Wall Street’s targets for the fourth quarter and gave conservative guidance for the current quarter and full-year 2016. Investors punished Activision stock on Friday. In morning trading, Activision shares were down about 10% to about 27 on the stock market today . On Dec. 29, Activision stock hit an all-time high of 39.93. At least eight Wall Street analysts cut their price targets on Activision stock after the earnings report. The Santa Monica, Calif.-based company earned 83 cents a share excluding items on sales of $2.12 billion. Analysts polled by Thomson Reuters expected Activision to earn 86 cents a share on sales of $2.20 billion. On a year-over-year basis, Activision’s EPS fell 12%, and its sales slipped 4%. Activision was hurt by smaller-than-expected sales of “Guitar Hero Live” and “Skylanders” during the holiday quarter, as well as negative foreign-exchange trends, Benchmark analyst Mike Hickey said in a research report Friday. For the current quarter, Activision expects to earn 11 cents a share ex items on sales of $800 million. For 2016, Activision is looking to earn $1.75 in adjusted EPS on sales of $6.25 billion. Activision’s figures include its planned acquisition of King Digital Entertainment ( KING ), while current Wall Street estimates do not. Excluding King, Activision’s core adjust EPS guidance for the year would be $1.35, 21 cents below Wall Street consensus, Hickey said. “The company’s weaker-than-anticipated guidance was primarily attributable to the delay of (the sequal to action game) ‘Destiny’ and the general conservative nature of management,” Hickey said. He rates Activision stock buy, but he lowered his price target to 37.63 from 43.07. ‘Call Of Duty’ Helped Activision The underperformance of “Guitar Hero” and “Skylanders” was partially offset by the continued success of “Call of Duty: Black Ops 3,” Piper Jaffray analyst Michael Olson said in a report Friday. He reiterated his overweight rating on Activision stock but cut his price target to 39 from 42. “We still believe a history of conservatism suggests the outlook may prove low,” Olson said. “Activision has exceeded its original full-year revenue and EPS outlook, on average, by 19% and 7% from ’09 to ’15.” Excluding a tax benefit, Activision would have missed its earnings guidance for the first time in 10 years in the fourth quarter, Wedbush analyst Michael Pachter said in a report Friday. He maintained his outperform rating on Activision stock but lowered his 12-month price target to 40 from 47. Pacific Crest Securities analyst Evan Wilson said the holiday season proved “strangely difficult” for the video game industry. Activision, Electronic Arts ( EA ), GameStop ( GME ) and Ubisoft all disappointed with their recent earnings reports, he said. “This is supposed to be the sweet spot right?” Wilson said in a report Thursday. “What has become clear is that the breadth of successful games continues to narrow, and increases in competition can have a huge impact, especially on lower-quality or casual titles. This holiday likely fully transitions the sector from ‘buy the basket’ to ‘buy the slate,’ as releases don’t guarantee success.” Wilson maintained his overweight rating on Activision stock but trimmed his price target to 36 from 41. RELATED: Take-Two Interactive Software’s Games Show Staying Power; Q3 Beats Electronic Arts Falls On Mixed Q3, Weak Guidance . Scalper1 News
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