Stifel Remains A Buyer Of Activision Blizzard Into Q4 Earnings Print

Activision Blizzard, Inc. (NASDAQ: ATVI) shares are already down more than 26.5 percent so far in 2016. With the company set to report on February 11, is the selloff a sign of bad things to come or simply an excellent buying opportunity ahead of earnings? According to Stifel analyst Drew Crum, Activision Blizzard stock is currently a steal.

"The shares have lagged ytd (-21% vs. S&P 500 -8%), we think based on 1) uncertainties around the content strategy for the Destiny franchise in ’16 ; and 2) mid-cycle multiple compression as the industry approaches its 'perceived peak' (though we beg to differ on this point) ~ the former will likely be addressed with earnings, while the latter could linger," Crum explained in a new report.

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Overall, he believes the Buy-rated stock offers a compelling risk/reward at 15x 2016 EPS estimates.

Stifel is calling for the company to announce conservative 2016 EPS guidance of $1.50 and has reduced its own estimate from $1.60 to $1.53. In addition, Stifel expects Actvision Blizzard to reiterate its 30 percent accretion projections associated with its King Digital Entertainment PLC (NYSE: KING) acquisition, which the firm believes will close by the end of February.

Disclosure: the author holds no position in the stocks mentioned.