After Activision (ATVID) more than doubled their Q1 profits in Q2, Citi analyst Brent Thill has decided to raise the video game company’s target to $45. He is looking forward to the success of the Activision Blizzard merger:
Activision Blizzard is a powerful combo that owns some of the most popular brands (Guitar Hero, World of Warcraft, Call of Duty) going into not only the Holiday Season, but also the heart of the console cycle. Despite its success to date, we see considerable potential in the near-term opportunity for deeper penetration of its core brands in Europe, while Blizzard’s success in Asia opens up that region to ATVI’s core brands as well.
Also, Thill believes that most investors just don’t understand how valuable Blizzard is:
We think Blizzard is flying under the radar of most investors (unless you know what a “Zerg” is) and with two high margin PC titles expected to hit in 2009 (a sequel to the 9.5M unit selling StarCraft franchise and 18.5M unit selling Diablo franchise) we are modelling CY09 pro forma EPS of $1.50. These popular brands mixed with the strongest execution set against a healthy multi-year industry backdrop should be a powerfully rewarding elixir for ATVI shareholders.
Citi maintains BUY on Activision Blizzard (ATVID), target raised from $36 to $45.
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