UBS has raised its price target to $120 on Activision Blizzard. Should I invest?

Activision Blizzard, Inc. (NASDAQ: ATVI) shares have weakened from their recent highs above $90, and the current price stands around $82. Activision Blizzard reported better than expected second-quarter results this month and expects to see strong trends in the upcoming quarters.

Fundamental analysis: UBS has raised its price target to $120 on Activision Blizzard

Activision Blizzard's business continues to perform well, and the company reported better than expected results this month. Total revenue has decreased less than 8% Y/Y to $1.92 billion, while the second quarter GAAP EPS was $1.12 (beats by $0.30).

Activision Blizzard finished the second quarter with 408 million monthly active users (MAUs), and the company began the third quarter in a strong position. Positive information is that videogame industry sales rose again on a year-over-year basis in July, and according to estimates, ATVI could have another strong quarter.

For the 2021 fiscal year, Activision Blizzard expects net bookings of $8.65 billion, while the earnings per share should be around $3.76. Last week, Citigroup upgraded Activision Blizzard to buy and assigned a price target of $105, which implies more than 25% upside.

Activision Blizzard shares have weakened more than 15% over the past three months, pressured by a California labor lawsuit challenging a "toxic" culture together with regulatory risk concerns in China.

UBS has raised its price target to $120 on Activision Blizzard after the second-quarter earnings report as it sees this company well-positioned for success in the third quarter and, more importantly, beyond. UBS reported that full-year bookings estimates should be in line with management guidance and warned that Activision Blizzard faces some slowdown from pandemic highs and a more intense regulatory environment in China.

Technical analysis: Activision Blizzard shares have weakened more than 15% from their recent highs

Activision Blizzard shares have weakened more than 15% from their recent highs registered in June, and if the price falls below $80 support, it would be a strong "sell" signal. On the other side, if the price jumps above $90, it would be a signal to buy shares, and the next target could be around $95.

Summary

Activision Blizzard reported better than expected second-quarter results this month and expects to see strong trends in the upcoming quarters. After the second-quarter earnings report, UBS has raised its price target to $120 on Activision Blizzard, while Citigroup has upgraded Activision Blizzard to buy and assigned a price target of $105.