Can New Consoles Save Activision Blizzard, Inc. (ATVI)?

Microsoft Corporation (NASDAQ:MSFT) is marketing its Xbox One more as a media center than as a standalone gaming console. Despite Sony’s pessimism about its PlayStation 4, Microsoft Corporation (NASDAQ:MSFT) is pretty positive about Xbox One. The company plans to sell anywhere between 400 million to 1 billion units of its next gen Xbox. Such optimism is good news for Activision as well, as it will be releasing Destiny on Xbox One next year.

Bottom line

Sagging video games sales and plummeting WoW subscriptions may spell trouble for Activision Blizzard, but the company is adapting itself to newer trends. It is taking to release more frequent updates to games to keep gamers occupied. Activision’s new Call of Duty: Black Ops II DLC is now available. It is also meditating about the mobile market, although yet has to make any concrete game plan.

New consoles are expected to help the company in beating the negative trend. Activision reported better than expected results for the first quarter. Despite tight guidance, second quarter results are also likely to beat estimates. The company also has many positive catalysts coming up in the form of new DLCs and game launches.

Activision Blizzard, Inc. (NASDAQ:ATVI)’s stock saw a good runup this year, but it still trades at comparatively low forward P/E ratio of 13.43, while peers like Electronic Arts commands forward P/E ratio of 15.4. The stock is a good buy, but keep a cautious outlook.

The article Can New Consoles Save Activision Blizzard? originally appeared on Fool.com and is written by Jag Mitra.

Jag Mitra has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard. The Motley Fool owns shares of Activision Blizzard and Microsoft. Jag is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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