Varchild raises ATVI to "Strong Buy" from "Hold" and lifts EPS estimate $16
Yes Yes.. I'm allowed to do this to a stock I own 565 shares of.... Hey.. I wasn't wrong when I screamed STOP!!! when the share price struck $13.00 was I??? And it's my blog!
Was I wrong when I lowered my stance from Strong Buy to HOLD just prior to anyone else in the actual, professional, paid analyst world lowering their expectations? I mean.. I was first to declare HOLD on ATVI.. I did it HOURS before Standard and Poors came out and lowered their Strong Buy stance to Hold.
I was right I was right!! I can't always be right... But, I was right...so I can maybe be right again?
I do deserve a little respect for making my bullish claim on ATVI.. a stock I own 565 shares.... This doesn't mean I want people racing to their Bank to withdrawl their entire savings account and pouring their hard earned money into ATVI expecting the share price to explode to the upside in 3....2......1....seconds from now....
Cause if that's the attitude anyone takes from reading this.... That's wrong... ATVI is going to sorta fluctuate still like a slow growth stock... It's not ready for "Oh My God... Momentum Baby!" status yet.
That gets reserved for Q4 Christmas Sales + a firm stance from ATVI as to their 2010 expectations. I'd love to see ATVI explode to $99999999 a share... I mean who wouldn't?
But, in a realistic world you can't expect more than a couple of points of upside out of this earnings report.
Took several months after DPS IPOed to finally enter "Momentum Status" back to $19 a share from Slow Growth status... DPS is another stock I own... And I sat on that one for a very long time before it started to explode to the upside back towards where it started from.... Hopefully that one does well...and momentum continues...
But anyhow... That's my disclaimer and I am sticking to it....
Here's the game plan for (ATVI).
It is now "OK" to buy ATVI at $13.00 a share.... But, I'm putting up a SELL! rating if this thing touches $16.00 a share before the next earnings report. There is still too much "touch and go" to be any more bullish than that. I'd love to be more bullish but a smart investor selects their ceiling carefully and sits on that ceiling waiting for any sign that it should be lifted.
I know my $16.00 ceiling 12 month target price here CAN be lifted... Starcraft II is the catalyst for that. It is the catalyst for ACHIEVING $16.00 a share and perhaps exceeding that.
So.. 12 month target price? $16.00 instead of roughly $13.00..... Not really earth shaking stuff here.
At $11.55 this one is now a Strong Buy.
A) Increased Share Buyback Program +$250 million means you'll be buying alongside the company for awhile longer than previously expected.
B) Outperformance in Q2 (a total of 4 beats on company outlook in a row now since Blizzard) opens the door for Outperformance in ATVI's extremely cautious/bearish outlook for revenue for Q3/Q4.
Q3/Q4 has one thing going for it that Q2 does not. WoW comes back on-line in CHINA...
C) 2.8 pts better Market share + better Margin Growth isn't just 2.8 pts better. It is an upward trend that this company has had for quite sometime now.
End of my story...
For newcomers to the Video Game Investment World... Look for a news article from Blizzard stating, "STARCRAFT II goes GOLD!" to mean that the disks for the game have been manufactured or are being manufactured for distribution to store shelves. That article and not the actual sales data is what will finally turn ATVI for a short time period into a Momentum Stock.