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Could Activision Blizzard Be an $81 Stock?

By Demitri Kalogeropoulos - May 15, 2020 at 3:10PM

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A packed pipeline of content could deliver robust sales growth for the video game publisher this year.

Investor sentiment continues to rise for Activision Blizzard's (ATVI 0.31%) stock. The video game publisher received a growth upgrade on Friday as a SunTrust analyst raised his price target for shares to $81 each. That figure would equate to an 11% increase from the stock's current level.

In early May, the company reported surprisingly strong sales and profits, in part because its portfolio of video game products became one of just a few types of entertainment available to most consumers during stay-at-home and shelter-in-place orders.

Yet Activision's faster growth is due to more than just the positive industry environment. It launched a flood of hit content over the last few months, including Call of Duty: Warzone, a respectable entry into the free-to-play battle-royale niche. That title has lifted demand for premium products in the Call of Duty brand like Modern Warfare, which just set a new sales record for the franchise.

A young man playing a console video game.

Image source: Getty Images.

Activision is on pace to release another major installment of the franchise this fall even as its development work has moved offsite. That Call of Duty release, plus a new World of Warcraft expansion, might allow the company to meaningfully outperform its latest sales outlook if it resonates with gamers. That success could easily push the stock price higher.

Demitrios Kalogeropoulos owns shares of Activision Blizzard. The Motley Fool owns shares of and recommends Activision Blizzard. The Motley Fool has a disclosure policy.

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