The Zacks Analyst Blog Highlights: Activision Blizzard, Electronic Arts, Take-Two Interactive, Zynga and United Continental Holdings

Zacks

For Immediate Release
 
Chicago, IL – May 27, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Activision Blizzard (ATVI-Free Report), Electronic Arts (EA-Free Report), Take-Two Interactive (TTWO-Free Report), Zynga Inc (ZNGA-Free Report) and United Continental Holdings Inc. (UAL-Free Report).
 
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Here are highlights from Friday’s Analyst Blog:

Activision Prices Vivendi’s 41.5M Share Offering

Video game developer Activision Blizzard (ATVI-Free Report) recently priced 41.5 million shares, which its one-time majority shareholder Vivendi intends to offer in the secondary market. Vivendi is expected to receive $850.0 million for the 5.8% stake. The offer is set to close on May 28, 2014.

Earlier, in Oct 2013, Activision and ASAC II LP, an investment group acquired 601 million shares (approximately 88.0% stake in Activision) from Vivendi for approximately $8.17 billion. Post the current offering, Vivendi will have 5.8% remaining stake in Activision, which it intends to eventually sell after the expiration of the 15-month restriction period.

Although the current deal does not affect Activision financially, it gives a lot of freedom to the company’s management in decision making. Vivendi’s lower stake will help the current management to operate freely and take necessary steps that will boost shareholders' wealth.

Activision is expected to benefit from a strong product pipeline in 2014. The company, in partnership with Tencent, is set to bring Call of Duty to China, both on the PC as well as a free-to-play-game.

In the third quarter of 2014, Activision plans to release Destiny which is believed to be the biggest video-game IP launch in history. The fourth quarter will witness the launch of Skylanders: Trap Team and Call of Duty: Advanced Warfare.

These are expected to drive top-line growth in 2014. However, intensifying competition from the likes of Electronic Arts (EA-Free Report), Take-Two Interactive (TTWO-Free Report) and Zynga Inc (ZNGA-Free Report) remains a major concern. Additionally, Activision’s limited presence in the mobile gaming segment is a headwind.

Further, the continued strong demand for new consoles is expected to remain an overhang on overall software sales, which will hurt Activision’s top-line growth in the near term. Moreover, higher marketing expenses related to Destiny and the Call of Duty game launch will keep margins under pressure in 2014.

Currently, Activision Blizzard has a Zacks Rank #3 (Hold).

United Connecting Chicago, Edinburgh

United Airlines – the wholly owned subsidiary of  United Continental Holdings Inc. (UAL-Free Report) – has launched its non-stop summer service between Chicago and Edinburgh, as announced previously in Sep 2013. The flight marks the first non-stop scheduled commercial service between the two cities and will run till Oct 5, 2014.

Initially, United Airlines plans to run five flights every week between May 22 and June 11 and then move on to operating daily flights between Jun 12 and Sep 1. Thereafter, frequency will drop to four flights a week between Sep 2 and Oct 5. United Airlines is using Boeing narrow bodied 757-200 aircraft with 169 seats including 16 flat-bed options.

The east bound flights will depart Chicago at 6 pm local time and will take 7 hours 45 minutes to reach Edinburgh, while the flights to Chicago will take 50 minutes more. According to United Airlines, the flights are strategically timed to allow passengers to connect with 125 different destinations across the Americas. Notably, United Airlines currently operates non-stop flights between New York and Edinburgh, having initiated operations in 1998.

Meanwhile, this new airline service will not only enhance passenger count but will also increase the transatlantic offering at Scotland’s busiest airport.

The addition of this new route comes as a strategic move given that airline traffic flow is expected to increase in Scotland as the country is set to host two popular sporting extravaganzas – the Commonwealth Games and Ryder Cup in 2014. We believe United Airlines wants to tap this opportunity by allowing more U.S. visitors to avail the non-stop flight service between Edinburgh and Chicago.

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