U.S. Markets close in 2 hrs 16 mins

Activision Plunges on Loss Of 'Destiny,' KeyBanc Lowers Price Target

Dave Royse

Activision Blizzard, Inc. (NASDAQ: ATVI) stock was plunging Friday after game developer Bungie announced it was ending its contract with Activision and would retain rights to the "Destiny" game franchise.
The split led KeyBanc Capital Markets to lower its price target for Activision Blizzard.

The Analyst

KeyBanc analyst Evan Wingren maintained an Overweight on Activision Blizzard and lowered the price target from $80 to $64.

The Thesis

The loss of "Destiny" will be a short-term revenue and earnings issue for Activision, Wingren said in a Thursday note.

KeyBanc reduced its estimates for both fiscal 2019 and 2020. 

“Short-term concerns are valid; long-term opportunity remains unchanged,” the analyst said. 

A joint statement from Activision and Bungie this week said Activision will “increase its focus on owned-IP and other projects,” but didn’t give a reason for Bungie taking over the "Destiny" franchise. 

“By ending the relationship, (Activision) is implying that despite an impact to near-term earnings, it sees higher terminal value in deploying development resources elsewhere,” Wingren said. 

Price Action

Activision Blizzard was trading down 9.55 percent at $46.44 at the time of publication Friday. 

Related Links:

Activision Blizzard Q3 Takeaways: 'Call Of Duty,' E-Sports And More

Activision Blizzard In A Battle Royale Of Its Own Against 'Fortnite'

Photo courtesy of Activision Blizzard. 

Latest Ratings for ATVI

Date Firm Action From To
Jan 2019 KeyBanc Maintains Overweight Overweight
Jan 2019 Stephens & Co. Initiates Coverage On Overweight
Dec 2018 JP Morgan Upgrades Neutral Overweight

View More Analyst Ratings for ATVI
View the Latest Analyst Ratings

See more from Benzinga

© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.