Video game stocks have been on fire in 2017, with Activision Blizzard, Inc. ATVI 0.33% among the five best-performing stocks in the entire S&P 500 on the year.
Buckingham Research group recently initiated coverage of Activision,Take Two Interactive Software Inc TTWO 1.1% and Electronic Arts Inc. EA 0.41% with Buy ratings cross the board and said investors can expect the stocks to level up even further in coming months.
Activision
When it comes to gaming stocks, analyst Scott Krasik said Activision is the gold standard.
“Within the video game sector we view ATVI as the best managed and the best positioned to benefit from strong industry dynamics,” Krasik wrote.
While acknowledging that market sentiment is extraordinarily high at the moment, he said there is still room for upward earnings and guidance revisions. For now, Krasik said the risk/reward balance for Activision stock is still skewed higher, with 40 percent potential upside and only 20 percent potential downside.
EA
Krasik said now is the time for investors to get in the game when it comes to EA Sports stock. According to Krasik, industry tailwinds should carry EA to sustainable growth and long-term margin expansion. The company’s transition to a digital distribution model should provide a permanent bump to margins and help smooth out long-term revenue projections.
Take Two
Finally, Krasik said Take Two is still in the early stages of its digitization process. While the company’s earnings will continue to have a cyclical element, margin expansion and sales growth will raise…
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