Activision Blizzard: Color on Quarter --> ATVI +7% near $24.40 premarket.
- Stifel notes ATVI reported better-than-expected 2Q results, with non-GAAP EPS of $0.13 (vs. $0.06) which came in ahead of our estimate/consensus/guidance (all $0.07) ~ the favorable variance was largely driven by top line outperformance with revenue at $759 million (vs. Stifel estimate $668 million), and notable strength for digital. 2015 guidance was increased and they thought mgmt was bullish on the upcoming game slate. Overall, this was another strong quarter for Activision Blizzard, Buy.
- Brean Capital raises their ATVI tgt to $32 from $30. Current trends give them greater confidence in Activision's potential upside. Activision reported upside to 2Q15 guidance and, for the second quarter in a row, raised its full year guidance for net revenue and non-GAAP EPS. They continue to believe that increasing traction for Blizzard's F2P titles, which drove much of the upside to 2Q15, points to the potential for upside to these numbers and an emerging business model which is higher margin and less seasonal despite expectations for lower revenue from World of Warcraft, which has lost 45% of its user base since the start of the year. They note that digital revenue made up 79% of all non-GAAP revenue year-to-date, up from 70% in the prior year.
- Mizuho raises their ATVI tgt to $31 from $29. This was a clean beat and raise quarter, and they are convinced that there is still conservatism built into the guide. The shining star during the quarter was digital sales which accounted for 81% of total revenue and helped drive record gross margin of 75%. Furthermore, A|B is seeing solid growth in add-on digital sales, which is now the largest and fastest growing component of digital revenue. With several major franchises to come, including a major Destiny expansion, Skylanders, Guitar Hero, Call of Duty, and StarCraft, they remain positive on ATVI shares.
- Jefferies target raised to $33 from $26