Activision Blizzard, Inc. (ATVI) shares rose about 1% during Monday's session—before turning lower amid a wider market downturn—after Goldman Sachs resumed coverage with a Buy rating and a $110.00 price target.

Key Takeaways

  • Activision Blizzard shares briefly moved higher during Monday's session after Goldman Sachs resumed coverage with a Buy rating and a $110 price target.
  • Analyst Michael Ng notes that proxies for engagement reached record levels during the fourth quarter, while other analysts see momentum in China.
  • The relative strength index (RSI) remains near overbought levels, and the moving average convergence divergence (MACD) is in neutral territory, which suggests that the stock could see some consolidation.

Proxies for Engagement

Analyst Michael Ng noted that proxies for engagement reached record levels during the fourth quarter of 2020, surpassing levels achieved during the height of the pandemic. In addition to Activision Blizzard, the analyst resumed coverage of Take-Two Interactive Software, Inc. (TTWO) and Electronic Arts Inc. (EA) with Buy ratings, citing momentum in the gaming space.

The move comes shortly after Morgan Stanley's Brian Nowak said that a strong start for Activision Blizzard's "Call of Duty Mobile" in mainland China had likely generated more than $80 million in total consumer spend thus far since launching on Christmas. Nowak maintains an Overweight rating on Activision stock with a $108 price target and a $130 bull case price target.

Chart showing the share price performance of Activision Blizzard, Inc. (ATVI)

TradingView.com

From a technical standpoint, Activision stock moved to retest its highs made last week. The RSI remains lofty with a 68.07 reading, while the MACD remains in neutral territory. These indicators suggest that the stock could see some potential consolidation ahead despite the bullish news.

Traders should watch for consolidation within the stock's rising price channel over the coming sessions. If the stock breaks down from trendline support at $92.90, traders could see a move toward the 50-day moving average at $85.41, although that scenario appears less likely to occur given the bullish fundamentals. If the stock breaks out from prior highs, traders could see a move toward upper trendline resistance near $98.00.

Tip

Overweight, and its opposite underweight, are used by analysts and commentators in recommendations to buy or avoid particular investments or sectors. For example, if federal defense spending is about to be increased or decreased, an analyst may recommend that an investor go overweight or underweight on defense-related companies.

The Bottom Line

Activision Blizzard shares briefly rose Monday before giving up ground later in the session after Goldman Sachs resumed coverage with a Buy rating and a $110 price target. Despite the bullish sentiment, technical indicators suggest that the stock could see some consolidation before resuming its upward trend.

The author holds no position in the stock(s) mentioned except through passively managed index funds.