Activision Blizzard Inc. (ATVI) shares have taken a beating in recent weeks over concerns that holiday sales of video games will disappoint this season. The stock is down 20% from its 52-week high of $45.55 and has been trading lower throughout most of December.

The decline in shares and a lackluster sales forecast for the industry sent lots of shareholders running for the hills, but not everyone is bracing for more bad news in 2017. Take for starters. From a stock trading perspective, estimates shares of Activision trade at 19.3 times its 2017 earnings forecast, which is less than Electronic Arts (EA), which said trades at 25 times next year’s earnings, and Take-Two Interactive Software Inc. (TTWO), which trades at 29.3 times 2017 earnings.

What’s more, pointed out the average 12-month price target for Activision is $48 a share, which means they expect it to climb around 34% from where it’s trading today. It doesn’t hurt that Activision pays out a dividend, although investors aren’t going to get rich off it. The yield is only around 0.7% according to The, but Activision has raised its dividend in the past.

NPD Assessment Weighed on Shares

On the business front, namely NPD Intellect’s assessment of November sales, says that forecast doesn’t take into account digital sales of video games, which are seeing growth even if physical store sales were down in November. What’s more, Activision faced a lot of competition in terms of new game titles from Electronic Arts and others leading up to the holidays.

Earlier this month, worries about video game sales reached panic levels after NPD reported physical game sales of Call of Duty: Infinite Warfare were down close to 50% in November when compared to last year’s Call of Duty: Black Ops III. Meanwhile, Cowen analyst Doug Creutz said in a research report that "'Infinite Warfare' units came in 17 percent shy of our expectations, down close to 50 percent [year-over-year]."

Still, Activision isn’t concerned with NPD’s assessment, saying recently that based on year-to-date revenue from physical unit sales Call of Duty: Infinite Warfare is the No. 1 console video game in the U.S. The game, which launched on Nov. 4, is also the top-selling console game for the month of November. "Call of Duty is retail's #1 grossing console franchise in the U.S. for the 8th consecutive year … and Infinite Warfare is the #1 grossing console game of the year at retail in the U.S.," said Eric Hirshberg, Activision's CEO in a press release announcing the sales results. "In addition to our annual blockbuster release, Call of Duty is about engaging fans year around." (See also: Activision Reacts: Actually, We're No. 1 in Sales.)


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