- Activision Blizzard is trading 1.8% higher on Friday after Credit Suisse analyst Stephen Ju boosted his price target on the company.
- Video game companies have long overlooked the mobile gaming market, but not any longer, he said.
- Companies that move their popular game franchises to mobile devices will see their profits and audience grow, said Ju.
- Activision Blizzard is particularly well-positioned to dominate this market because of the popularity of its PC/console games like “Call of Duty,” “Overwatch,” “World of Warcraft,” “Diablo” and “Starcraft.”
- View Activision’s current stock price moves here.
Video game companies by and large have done well for themselves, successfully identifying on popular games that people want to buy. But getting to the next level requires the move onto a smaller screen that fits in your hand: the mobile phone.
Companies that bring consumers’ favorite video games to mobile devices will likely dominate the market, according to Credit Suisse analyst Stephen Ju. He raised his price target on Activision Blizzard to $81 from $77 on Friday, maintaining his outperform rating and arguing that it’s the company best positioned to do just that.
Ju notes that Activision has plans to release mobile versions of its franchises, which include “Call of Duty,” “Overwatch,” “World of Warcraft,” “Diablo” and “Starcraft.”
“We believe mobile versions of existing franchises will exert the greatest influence on Activision’s growth as this has the potential to materially expand the audience from the console/PC-based audience to a global footprint on mobile,” analyst Stephen Ju wrote in a note.
Though Ju believes we will not see mobile versions of popular franchises come to market this year, he said we will see announcements by companies detailing their plans to release them.
Ju says that Activision could make $1 billion, or $200 million from each game, if the company’s games make it onto phones.
Although its flagship games aren’t yet available, Activision has seen its foray into mobile gaming boost profits already. The company acquired King Digital, the creator of “Candy Crush,” for $5.9 billion, and the continued popularity of the mobile games could drive more profits from digital advertisements.
Other video game competitors could encroach on the mobile gaming market as well, notes Ju. Electronic Arts has brought its popular “FIFA,” “Madden,” “NBA Live,” and “Sims” games to mobile, and Take-Two Interactive Studios may closely integrate its existing studios with Barcelona-based Social Point, a mobile game developer.
Activision’s stock was up 1.8% at $72.06 a share. It’s traded up roughly 11% year-to-date.
- Markets Insider