Microsoft: Price Target Upgrade On Acquisition Of Activision
Summary
- Following the announced Microsoft acquisition of Activision Blizzard, we determined the outlook of Activision based on its upcoming game releases, deriving a forward 5-yr average revenue growth of 13%.
- We believe that Microsoft could leverage Activision’s massive active user base for its Game Pass subscription services with an estimated $484 mln in synergies for 2023.
- In terms of its financial impact, we see the deal supported by Microsoft’s massive cash pile, contributing 4% to top-line revenue.
- We raise our price target on Microsoft, and in conjunction with the recent price decline, view a strong buying opportunity for the company's shares.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of MSFT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
No information in this publication is intended as investment, tax, accounting, or legal advice, or as an offer/solicitation to sell or buy. Material provided in this publication is for educational purposes only and was prepared from sources and data believed to be reliable, but we do not guarantee its accuracy or completeness.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.