Activision Blizzard, Inc. (NASDAQ: ATVI) shares have weakened from their recent highs above $90, and the current price stands around $82. Activision Blizzard reported better than expected second-quarter results this month and expects to see strong trends in the upcoming quarters.

Fundamental analysis: UBS has raised its price target to $120 on Activision Blizzard

Activision Blizzard’s business continues to perform well, and the company reported better than expected results this month. Total revenue has decreased less than 8% Y/Y to $1.92 billion, while the second quarter GAAP EPS was $1.12 (beats by $0.30).

Activision Blizzard finished the second quarter with 408 million monthly active users (MAUs), and the company began the third quarter in a strong position. Positive information is that videogame industry sales rose again on a year-over-year basis in July, and according to estimates, ATVI could have another strong quarter.

“Our increased investment in our largest franchises over the last two years has significantly expanded the scale and enhanced the financial trajectory for Call of Duty, World of Warcraft, and Candy Crush. With respect to our financial performance, we are pleased that the company continued to deliver strong results in the second quarter, and we are raising our outlook for the year,” said CEO Bobby Kotick.

For the 2021 fiscal year, Activision Blizzard expects net bookings of $8.65 billion, while the earnings per share should be around $3.76. Last week, Citigroup upgraded Activision Blizzard to buy and assigned a price target of $105, which implies more than 25% upside.

Activision Blizzard shares have weakened more than 15% over the past three months, pressured by a California labor lawsuit challenging a “toxic” culture together with regulatory risk concerns in China.

“Current concerns about Blizzard’s execution and China regulatory risk are more than priced into ATVI’s equity at current levels,” Citigroup reported.

UBS has raised its price target to $120 on Activision Blizzard after the second-quarter earnings report as it sees this company well-positioned for success in the third quarter and, more importantly, beyond. UBS reported that full-year bookings estimates should be in line with management guidance and warned that Activision Blizzard faces some slowdown from pandemic highs and a more intense regulatory environment in China.

Technical analysis: Activision Blizzard shares have weakened more than 15% from their recent highsData source: tradingview.com

Activision Blizzard shares have weakened more than 15% from their recent highs registered in June, and if the price falls below $80 support, it would be a strong “sell” signal. On the other side, if the price jumps above $90, it would be a signal to buy shares, and the next target could be around $95.

Summary

Activision Blizzard reported better than expected second-quarter results this month and expects to see strong trends in the upcoming quarters. After the second-quarter earnings report, UBS has raised its price target to $120 on Activision Blizzard, while Citigroup has upgraded Activision Blizzard to buy and assigned a price target of $105.

The post UBS has raised its price target to $120 on Activision Blizzard. Should I invest? appeared first on Invezz.