The companies included in Credit Suisse’s analysis are Activision Blizzard Inc. (NASDAQ: ATVI), Electronic Arts Inc. (NASDAQ: EA) and Take-Two Interactive Software Inc. (NASDAQ: TTWO).
Credit Suisse updated its estimates as it factors in the appreciation of the U.S. dollar versus the major global currencies. Across these three companies, currency headwinds generally accounted for a 2% to 5% decrease to revenue and adjusted earnings per share (EPS).
Overall Credit Suisse has not made significant changes to its near-term estimates for Activision Blizzard, as most of the release slate for 2015 has already been set for the second quarter of 2015 and beyond. The brokerage firm has modeled the following:
- Added 3 million units of Guitar Hero Live
- Removed Diablo III console along with several other licensed titles
- Modestly reduced Skylanders and Call of Duty unit volume estimates
The brokerage firm remains on the lookout for incremental changes to the release slate for this year as it expects Activision Blizzard to perhaps announce one more franchise set for release in 2015.
Monday afternoon, shares of Activision Blizzard were relatively flat at $23.08, in a 52-week trading range of $17.73 to $24.18. The stock has a consensus analyst price target of $26.23. Credit Suisse has an Outperform rating for Activision Blizzard with a price target of $28.
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Credit Suisse made extensive changes to its longer term estimates for EA:
- Added free to play versions of Need for Speed and Battlefield
- Removed long-term MMORPG products from the release slate for fiscal year 2020 and fiscal year 2021
- Increased growth trajectory for mobile game revenue by an incremental $100 million per year
- Explicit contribution from Madden Ultimate Team
Shares of EA were down 0.6% at $58.95. The consensus analyst price target is $58.70, and the 52-week trading range is $28.03 to $60.63. Credit Suisse maintained an Outperform rating and moved its price target up to $68 from $56.
In terms of Take-Two, Credit Suisse made the following adjustments to its model:
- Shifted GTA V PC release to first quarter of fiscal 2016
- Removed Agent from its release slate
- Increased estimates for Evolve
- Added a WWE 2k15 PC release to first quarter of fiscal 2016 (We expect investor focus will be on initial fiscal year 2016 guidance as this should give investors a sense of release time frame for a potential Red Dead sequel, as well as perhaps BioShock or even Midnight Club.)
Take-Two shares were relatively flat at $24.41, in a 52-week trading range of $18.45 to $30.80. The consensus price target is $33.85. Credit Suisse maintained a Neutral rating for Take-Two and lowered its price target to $32 from $33.
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