Activision Hits a New 52-Week High
Shares of Activision Blizzard (ATVI) reached a new 52-week high of $15.75 on Wednesday, May 15, 2013. The company recently announced better-than-expected first-quarter results and provided a positive fiscal year 2013 outlook.
The closing price of Activision on May 15 was $14.90, representing a robust one-year return of about 20.36% and a year-to-date return of about 36.07%. Average volume of shares traded over the last three months stands at approximately 7144.9K.
Activision has delivered an average positive earnings surprise of 52.61% over the past four quarters. This Zacks Rank #3 (Hold) company has a market cap of $16.58 billion and a long-term expected earnings growth rate of 13.34%.
First Quarter Highlights
Activision reported better-than-expected first quarter results driven by higher revenues and margin expansions. Revenues for the quarter jumped 37.0% from the year-ago quarter to $804.0 million. Reported revenues were significantly ahead of management’s guidance of $690 million and also surpassed the Zacks Consensus Estimate of $706 million.
The company’s earnings per share also improved from 6 cents to 17 cents on a year-over-year basis. Including stock-based compensation of 2 cents, earnings came in at 15 cents per share, handily beating the Zacks Consensus Estimate of 9 cents.
Guidance
For the second quarter of 2013, Activision expects non-GAAP earnings of 5 cents per share, higher than the Zacks Consensus Estimate of 4 cents. Activision expects revenues of $590 million.
Activision Blizzard revised its fiscal 2013 earnings outlook from 80 cents to 82 cents. The Zacks Consensus Estimate is pegged at 76 cents. The company also revised its revenue estimates for fiscal 2013 from $4.17 billion to $4.25 billion.
Estimate Revision
In the last 30-day period, the Zacks Consensus Estimate remained at 4 cents for the second quarter. During the period, only one downward revision was noticed.
Conclusion
Activision’s product portfolio will boost top-line growth over the long term. Activision’s recent release, Call of Duty’s latest downloadable pack, Black Ops II Uprising, for Microsoft’s (MSFT) Xbox 360, will be a growth catalyst for the upcoming quarter.
However, continued softness in the video game industry, limited presence in the mobile gaming segment, higher adoption of free-to-play games are the near term headwinds for the company.
Other Stocks to Consider
Other stocks from the video game sector that are worth considering include Electronic Arts (EA) and Take-Two Interactive (TTWO) both of which carry a Zacks Rank #3 (Hold).
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