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Is Activision (ATVI) Poised for a Beat This Earnings Season?

Activision Blizzard Inc ATVI is set to report third-quarter 2017 results on Nov 2.

The company beat the Zacks Consensus Estimate in each of the last four quarters, with an average positive surprise of 39.81%. Last quarter, the company delivered a positive earnings surprise of 83.33%.

Notably, the stock has returned 80.8% year to date, substantially outperforming the 48.2% rally of the industry.

Let’s find out what Activision has to offer investors in this quarter.

 



 

Destiny 2 to Boost Sales

Launched on Sep 6 on Sony’s PlayStation 4 and Microsoft’s MSFT Xbox One, Destiny 2 — the new first-person shooter game from Bungie — has received rave reviews from the likes of GameSpot, IGN and Eurogamer.

Although the game was launched in the later part of the quarter, we believe that pent-up demand along with enhanced features are likely to boost player base. This will definitely drive top-line growth in the soon-to-be-reported quarter.
 

Activision Blizzard, Inc Price and EPS Surprise

 

Activision Blizzard, Inc Price and EPS Surprise | Activision Blizzard, Inc Quote

 

Expanding Game Portfolio: Key Catalyst

We believe that rapidly-growing digital revenues and continued strength in titles like Call of Duty will boost top line. Moreover, expanding franchise portfolio that includes offerings like StarCraft, World of Warcraft, Diablo, Hearthstone and Heroes of the Storm are key drivers.

The acquisition of King Digital Entertainment has also worked in favor of the company. King Digital had 314 million Monthly Average Users (MAUs) at the end of the last quarter.

Activision is also benefiting from improving presence in the lucrative e-sports market. Overwatch is a growth driver in this regard.

Competition Intensifies

Nevertheless, higher adoption of free-to-play games and significant competition from the likes of Electronic Arts EA, Take Two Interactive and Glu Mobile GLUU is a concern.

Why a Likely Positive Surprise?

Moreover, our proven model shows that Activision is likely to beat earnings due to the favorable combination of Zacks Rank #2 (Buy) and +5.80% Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) has a significantly higher chance of beating earnings estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

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Microsoft Corporation (MSFT): Free Stock Analysis Report
 
Activision Blizzard, Inc (ATVI): Free Stock Analysis Report
 
Electronic Arts Inc. (EA): Free Stock Analysis Report
 
Glu Mobile Inc. (GLUU): Free Stock Analysis Report
 
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