'Overwatch' Success Is A New Tentpole For Activision Blizzard

Activision Blizzard, Inc. (NASDAQ: ATVI) reported robust Q2 results, while raising its 2016 guidance.

Baird’s Colin Sebastian reiterated an Outperform rating on the company, while raising the price target to $46.

Robust Results

Sebastian mentioned that the strong Q2 results were driven by the successful launch of "Overwatch" and ongoing digital momentum.

Activision reported its 2Q non-GAAP revenue and EPS well ahead of the consensus expectations, driven largely by the 219 percent digital revenue growth.

Related Link: Activision Blizzard's Gaming Success Beats Top And Bottom Line

“King indicated that Candy Crush franchise revenues grew Q/Q and Y/Y, with no discernible impact to-date from Pokemon Go,” Sebastian stated.

Guidance Raised

Management raised its 2016 non-GAAP revenue and EPS guidance from of $6.275 billion and $1.78 to $6.475 billion and $1.90, respectively, “providing some additional cushion as Call of Duty pre-orders are tracking below last year.”

The 3Q15 non-GAAP revenue and EPS guidance is well ahead of the consensus, despite Activision usually issuing a conservative guidance and the robust pre-order trends for the expansion pack of "World of Warcraft Legion."

“Key drivers remain positive, including console installed base, mobile usage, in-game monetization and Digital mix shift. Activision Blizzard now has 491M MAUs across its network,” Sebastian said.

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