Activision Stock is a purchase after its big drop, Goldman Sachs says

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Stocks of video game publisher
Activision Blizzard

rose Tuesday after a bullish analyst said games from the entire company's brands could increase earnings.

Activity Warehouse (ATVI) was recently raised 4.3% to $ 44.11 as Goldman Sachs analyst Michael Ng upgraded the Buy to Neutral shares, adding the company to its conviction list.

Ng increased his target on Activision's shares by $ 4 to $ 54, just above the FactSet average of $ 53.

"With the stock down 13% since early May, they underperformed
S&P 500
and video game companions on disappointing quarterly results and concerns about Call of Duty 2020 we see this as an attractive entry point for a stock that, in our opinion, is facing a bend of earnings "he wrote.
EA

(EA) and
Take-Two Interactive Software

(TTWO).

Ng increased estimates for its 2020 and 2021 estimates, setting them $ 2.72 and $ 2.98, respectively, higher than the current FactSet consensus. His new 2019 estimate, $ 2.11, is under consensus.

In his note, Ng counted two high-profile games – Call of Duty and Overwatch – his reasons for optimism about the strength of Activision's upcoming games, but they were just some of the reasons why He gave: He also quoted an upcoming mobile Diablo installment, as well as updates to Hearthstone and World of Warcraft that could lift engagement.

"We expect a commitment bend for Blizzard's key franchise following an acceleration of content releases in the second quarter and beyond," he wrote. (The company's Blizzard division makes WoW, Diablo, Overwatch, and Hearthstone games, among others.)

Email David Marino-Nachison at david.marino- nachison @ barrons.com. Follow him on @marinonachison and follow Barron's Next on @barronsnext .