Analyst Maintains Outperform Rating on Activision, Raises Q2 and 2012 Revenue Estimates

Analyst Colin Sebastian of Robert W. Baird & Co. Incorporated sent out a note this morning to investors of Activision stock saying that they are maintaining a rating of outperform. This rating is based on Activision's latest financial results which were fairly solid thanks to sales of its Skylanders line of toy-game hybrid products for various platforms and continued sales growth in its Call of Duty Elite membership program. These things helped Activision offset retail sales of Call of Duty: Modern Warfare 3 (which are not quite as strong as the previous Call of Duty title). Sebastian also noted that World of Warcraft ended the first quarter with 10.2 million subscribers, a number that was better than expected by most analysts.

The other reason that the firm is rating the stock "outperform" is because of the impending release of Blizzard's Diablo III on May 15, and the inevitable release of the next expansion pack for World of Warcraft later this year, along with a new Call of Duty game in the fall. In addition Activision has several licensed games that it expects will do well such as Spider-Man and Transformers games, and new Skylanders properties.

Sebastian predicts Q2 revenue to be somewhere in the neighborhood of $810 million from $770 million, but has reduced the firm's EPS estimate to $0.12 from $0.14. For 2012 he expects revenue and EPS to be $4.55 billion and $0.95 from $4.5 billion and $0.95.


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