Analyst: Activision Blizzard’s 2014 Release Slate Among Its Best Ever

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The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.

Activision (NASDAQ:ATVI) reported a very strong quarter and increased full-year guidance slightly. The company delivered 19 cents in adjusted EPS compared to our estimate of 10 cents, consensus of 11 cents and guidance of 9 cents. Revenues were well above expectations, in part due to the “pulling forward” of revenues from presales of the World of Warcraft: Warlords of Draenor expansion, due later this year. The expansion included playable features that were available immediately, accelerating the recognition of what would otherwise have been deferred revenue.

We believe Activision’s release slate in 2014 is among its best ever. Blizzard has already released the first Diablo III expansion and will release the World of Warcraft: Warlords of Draenor expansion later this year. We expect each to contribute at least $200 million to revenue. In addition, Blizzard has released free-to-play Hearthstone (in April) and is expected to release Heroes of the Storm later this year.

Activision has also scheduled Destiny for a September launch. We view the game as a potential blockbuster, with as much as $500 million of sales potential in addition to DLC and Season Pass purchases. We have modeled revenue growth of over $350 million and believe sales can surpass our estimate.

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