Morgan Stanley sees 45% upside in Activision Blizzard: time to buy ATVI shares?

on Aug 27, 2021
  • Activision Blizzard shares on Friday edged higher by 1% after Morgan Stanley issued an upbeat note.
  • Analysts from MS said they expect the ATVI stock price to rally at least 45% in the coming quarters.
  • Activision trades at an attractive forward 12-month P/E ratio of 18.47. Time to invest in ATVI stock?

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On Friday, Morgan Stanley analysts issued an upbeat statement on Activision Blizzard Inc. (NASDAQ:ATVI) shares saying the stock to soar at least 45% in the next 12 months. The analysts cited Activision’s line-up for games as a key catalyst for growth.

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In a note to investors, the firm wrote:

Is the Blizzard Diablo and Overwatch pipeline intact and still coming in ’22/’23? We think it is, pointing to strong development teams at Blizzard [amid notable departures] and the company’s recent talk about a very significant 18-month period for content releases there.

The market expects Blizzard’s Diablo II: Resurrected to launch by September 2023, while Diablo: Immortal is coming in the first half of 2022. In addition, there are multiple Warcraft games to come, boosting the company’s topline growth.

Should you buy Activision Blizzard shares now?

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From a valuation perspective, Blizzard shares trade at a reasonable P/E ratio of 24.36. On the other hand, its forward P/E ratio of 18.46 suggests the stock could be potentially undervalued based on growth prospects.

Analysts expect ATVI earnings per share to grow by 44.90% this year before rising at an average annual rate of about 13.90% over the next five years. Therefore, Blizzard shares will be compelling to both value and growth investors. 

As a result, the stock could bounce back from this year’s 8.7% decline to retest its June highs of about $99.00 per share.

Source – TradingView

Technical overview: ATVI stock price forecast for September 2021

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Technically, Activision Blizzard shares seem to be trading within a descending channel formation in the intraday chart. However, Friday’s rebound prevented the stock price from venturing into oversold conditions of the 14-day RSI.

Therefore, although the Blizzard stock price seems to be under significant bearish pressure, the current rebound could continue following Morgan Stanley’s statement. As a result, investors can target profits at approximately $86.54 or higher at $92.34.

On the other hand, if the downward movement continues, the stock could find support at $77.03  or lower at $71.24.

Bottom line: why buy the Activision Blizzard stock rebound?

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In summary, the Blizzard stock seems to be under strong bearish pressure. However, with Morgan Stanley issuing an upbeat statement on outlook, it could be the time to buy the ATVI stock.

Moreover, the Blizzard stock recently bounced back to avoid crossing to oversold conditions, creating a perfect opportunity for investors to buy.


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