A screenshot from Activision/Treyarch's Call of Duty: Black Ops
Even if you're not a gamer, you may have noticed a lot of attention being paid to a little something called Call of Duty: Black Ops. It's a war-themed game, parts of which apparently involve zombies, that has grabbed the attention of the shoot 'em up set. And more important to investors, it's a hit.
According to Activision Blizzard Inc. , which published the game, Black Ops sold 5.6 million copies in North American and the U.K. within 24 hours of its release this week, racking up sales of $360-million (U.S.).
Activision shares were down in late-afternoon trading on Friday, as part of an overall market slump and retreat from risk. But it is interesting to compare the stock with its rival, Electronic Arts Inc. Over the past three years, a period that incorporates the economic boom, the financial crisis and the start of an economic recovery, Electronic Arts shares have fallen 71.5 per cent. However, Activision shares are up 14.7 per cent over the same period, also beating the S&P 500 by about 25 percentage points.
Hit games are the key here, and UBS analyst Brian Pitz believes that Black Ops alone is a good reason to own this stock. He reiterated a "buy" recommendation on the stock, along with a 12-month price target of $14 - but raised his fiscal fourth quarter earnings estimates by 2 cents a share, to 54 cents, and boosted his revenue expectations by $60-million.
"We believe Black Ops could continue momentum through Q4 given retail and marketing support," Mr. Pitz said in a note.
David Berman