Read ATVI's guidance closely. They see 80c earnings per share for fiscal 2013. The analyst consensus called for 97c. That's 22 percent less earnings than analysts predicted! Take Credit Suisse, for example. They estimated 2013 earnings of $1.04. Activision is guiding 30 percent lower! CS had a price target of $16 prior to earnings. If they shave 30% off that, the new target would be $11.20. What could possibly drive the stock higher with that dismal outook. A dividend hike? Share buybacks? I love Activision, play its games, believe in the co's creativity, owned its stock up until this report, but I'm afraid if you were watching after-hrs. you just saw the peak for about another year.
Actually I had half of my portfolio long on this stock, I made a nice profit, and may re-enter after a pullback. As of today, bullish analysts are still generally bullish, but they're not raising their price targets because of the weak guidance. S&P, for example, is sticking with $15. The stock reached an extreme $14 today, so if there was any time to take profits that was it. And going forward, by its own concession, Activision faces a transitional year that may very well show lower earnings than it did this year. Like the company, like the stock, love the games, but also like to preserve profits when I get 'em. Weird, huh?
Here's another equation, and please do check my math as it's not my strong suit. 2012 earnings came in at $1.19. Company projects 2013 at 80 cents. That's about 33 pct lower, right? Not being facetious, just don't see why anyone would pay higher for shares in face of this guidance.