Activision Jumps on Price Target Increase

Shares of Activision Blizzard were on the rise in pre market trading on Wednesday after a price target upgrade from an analyst.

Laura Martin, an analyst with Needham, raised her price target on the stock from $80 to $90, forecasting that the company’s Overwatch League will add $464 million in incremental annual operating revenue on average over the next eight years.

The analyst projects that by 2024, the company will generate 45% of Overwatch League revenues from media rights fees and that the incremental games sold will make for 22% of revenue.

She wrote in a note, “In addition, we would posit that team sales are actually an annuity stream because Activision owned the IP [intellectual property] for 7 of the most popular esports titles in 2017.”

She added, “We believe that Activision will use its learnings from the Overwatch League (its first esports league) to roll out new esports leagues sequentially based on its other successful esports titles.”

It was over the weekend that over 22,000 fans crowded the Barclays Center in Brooklyn, New York to watch the Spitfire and the Philadelphia Fusion in “Overwatch”, a futuristic team-based shooter game.

“I don’t think any company has made this commitment in resources, talent, people and capital that we’ve made to ensure something really incredible that will allow us to get the full benefit and the recognition that our players and our fans deserve,” Activision Blizzard CEO Bobby Kotick told CNBC from the event.

“So I don’t think anybody else has elevated esports quite the way that we have.”

In the last year, Activision shares are up 18%. The company will be releasing its Q2 financial results on Thursday.

Disclaimer: We have no position in Activision Blizzard, Inc. (NASDAQ: ATVI) and have not been compensated for this article.