Baird Analysts Reflect On Activision And The 'Call Of Duty: Experience 2016' Convention

Following Activision Blizzard, Inc. (NASDAQ: ATVI)'s “Call of Duty Experience” event in Los Angeles, Baird’s Colin Sebastian believes that the scheduled holiday released of Infinite Warfare was progressing on track.

Sebastian maintains an Outperform rating on the company, with a price target of $46.

“While eSports was a clear focus at the event, we note this is only one of several out-year growth drivers for Activision Blizzard, with micro-transactions (MTX) and mobile advertising likely contributing more to revenue growth over the next 12 months,” the analyst mentioned.

'Infinite Warfare'

Sebastian noted that although there continued to be some investor concern regarding the sales outlook for "Infinite Warfare," conversations with game reviewers and other attendees at the event suggest that the title would be “good enough” to attract the loyal "Call of Duty" fan base.

Related Link: Cowen's Gamescom Takeaways

According to the Baird report, “Of note, strong pre-order demand for the bundle with a re-mastered edition of Modern Warfare (2007) reflects the continuing strength of the Call of Duty franchise, and ostensibly provides another avenue to monetizing the back catalog.”

Other Opportunities

The event also focused on eSports, which Activision Blizzard believes would offer a billion-dollar market opportunity over the long term, mostly through digital sales and sponsorship.

“We view advertising as another potential billion-dollar opportunity for Activision Blizzard, and should begin to contribute incrementally next year, although for now, we expect digital transactions to be a bigger driver of growth,” Sebastian added.

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