ATVI

Activision Blizzard Inc

TMT


Presented:04/29/2020
Price:$64.79
Cap:$49.91B
Current Price:$94.42
Cap:$72.42B

Presented

Date04/29/2020
Price$64.79
Market Cap$49.91B
Ent Value$43.02B
P/E Ratio33.15x
Book Value$16.66
Div Yield0.63%
Shares O/S770.37M
Ave Daily Vol8,753,917
Short IntN/A

Current

Price$94.42
Market Cap$72.42B
Activision Blizzard, Inc. engages in the development and publication of interactive entertainment. It operates through the following segments: Activision Publishing, Blizzard Entertainment, and King Digital Entertainment. The Activision Publishing segment develops and publishes interactive software products and entertainment content, particularly for the console platform. The Blizzard Entertainment segment develops and publishes interactive software products and entertainment content, particularly for the PC platform. The King Digital Entertainment segment develops and publishes interactive entertainment content and services, particularly on mobile platforms, such as Google's Android and Apple's iOS. The company was founded in 1979 and is headquartered in Santa Monica, CA.

Publicly traded companies mentioned herein: Activision Blizzard Inc (ATVI), Electronic Arts Inc (EA), Take-Two Interactive Software Inc (TTWO)

Highlights

The presenter is long shares of Activision Blizzard Inc (ATVI), and while expecting a benefit from the near-term uptick in engagement due to the COVID-19 pandemic, his thesis is focused on ATVI’s multi-year earnings growth outlook. Based on the recent success of Call of Duty: Warzone, an exciting pipeline, and margin expansion opportunities, the presenter expects ATVI to compound earnings at a HDD – 20% range through 2022, ultimately generating EPS of $3.75 – $4 in 2022. Shares currently trade at ~$64, just above 20x the Street’s $3.17 2022 EPS estimate, and he uses a similar earnings multiple to reach a price target in the low- to mid-$80 range. He further highlights the asymmetric risk/reward profile, noting that the sector tends to trade on trough earnings (which he applied a 25x multiple on) and that it will be difficult to find analysts anticipating 2022 EPS below $2.50 – $2.60 after a strong 2020. 

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Idea Discussion

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