Activision
Morgan Stanley named Activision Blizzard as a top choice for 2022, among all non-FAANG stocks on Thursday
According to the investment firm, the company's pipeline should drive the stock up nearly 50% over current levels.
Morgan Stanley spoke out about upcoming releases, as Activision Blizzard is in California in a lawsuit for sexual harassment.
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Morgan Stanley announced Thursday that Activision Blizzard stock will rise by nearly 50% if it plays the Call of Duty or Diablo video-game franchises.
The bank described itself as "aggressive buyers” of Activision shares. They are currently down this year and the stock was deemed a top 2022 pick outside the FAANG group technology sector heavyweights, including Netflix, Amazon, Apple and Netflix. Activision Blizzard shares lost around 13% between Wednesday's session and the beginning of the year.
The stock should rise to $120 as its base case call. This would represent a 48% increase over Wednesday's closing price at $80.81.
In a research note, Brian Nowak, a Morgan Stanley analyst, stated that September is where "Call of Duty: Vanguard' reviews will continue to be positive, and hopefully, favorable reviews on "Diablo II: Resurrected", which would lead to strong sales around the 9/23 launch, setting the stage for investors recognizing the pipeline potential, and the path to $4.00+ per-share earnings.
After addressing the key investor debates surrounding each stock, Activision Blizzard now joins Uber and Compass in Morgan Stanley's top non-FAANG picks.
Activision Blizzard's major problem is the sexual harassment lawsuit that was filed by California against them in July after a two year investigation. J. Allen Brack was the Diablo studio Blizzard Entertainment head and several Activision executives have resigned.
Morgan Stanley stated that it was optimistic about the company’s pipeline, with the Overwatch and Blizzard diblo franchises on track to release new games in 2022 and 2023. It stated that game development teams are large and often include hundreds of people and that the upcoming games have been in development for many years.
"This shows, in our opinion, how many developers would have to leave to derail the development process."
Activision Blizzard also announced earlier this month that the June launch Blizzard’s Burning Crusade Classic marked what it expects to be an 18-month period of content releases. According to the investment bank, Activision's outlook has increased its confidence in the release of "Diablo IV" and "Overwatch 2" in 2022.
The firm sees Call of Duty continuing to be a leader despite the challenges of lower engagement due to more activities and businesses opening up in the ongoing coronavirus epidemic.
