Activision's Stock Has Been Downgraded By An Analyst, Who Also Predicts Black Ops 4 In 2018

The analyst group Cowen issued a note to investors about Activision this week.

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Activision Blizzard is one of the biggest publishers in gaming, and it's stock is riding high currently. But one analyst has now come forward with a note to investors that details "a combination of worries" about the company's stock price. As a result, Cowen & Company has downgraded Activision from its Outperform rating to a lower rating. It's the first time in nine years that Cowen has downgraded Activision's stock, apparently.

Starting off, Cowen believes that investor expectations for Activision's performance is fiscal 2018 is "too high." Based on conversations with Cowen's clients, the firm believes industry expectations--of overall industry growth of 12-13 percent year-over-year--is "highly unlikely."

In terms of specific concerns, Cowen said the Overwatch League--which starts up in earnest in December--may not be the revenue monster than investors are hoping for. Some investors see the Overwatch League as adding significant revenue to Activision Blizzard's bottom line, but Cowen says it's too early to say if this will be the case.

"We think esports [profit and loss] expectations for 2018 are low, but we also think OWL needs to demonstrate that it can attract a significant audience," the firm said. Cowen said it believes the first Overwatch League season will be "a learning experience," with better results later down the road. Indeed, Activision has spoken openly about how this first season is laying the groundwork for potentially bigger and better things to come in the future.

Another reason for Cowen's Activision rating downgrading is that the revenue from subsidiary King's advertising push "appears to be taking longer to launch than [it] had anticipated."

Overall, Cowen said it remains confident in Activision's core businesses. This year's Call of Duty: WWII should perform better than last year's underperforming Call of Duty: Infinite Warfare, Cowen said, while the firm also predicted that Call of Duty: Black Ops 4 will come out in 2018. [This has turned out to be true, and Black Ops 4 is real.] While Cowen is downgrading Activision's stock rating, it's important to note that no one can predict how Activision's stock with total accuracy. Indeed, Cowen acknowledged that Activision's stock could stay strong, especially if Blizzard launches a new title, potentially a Warcraft game for mobile devices or a StarCraft title.

If Blizzard is to announce any new titles, that could happen during BlizzCon 2017 in November. Keep checking back with GameSpot for the latest.

Activision Blizzard will release its latest quarterly earnings report on November 2, at which time the company will disclose key revenue and performance metrics. GameSpot will have a full rundown of those details at that time.

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BarcaAzul

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Edited By BarcaAzul

It's wierd, it's the first time since MW2 that I may get CoD. I have an itch to scratch.

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ninjaguiden78

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If they make a black ops 4 . They need to make it like black ops 2 no more flying on walls and no more futeristic garbage .

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deactivated-5c1c32e0b8cc8

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Black Ops needs to Black Stop.

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Richardthe3rd

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Edit this article, it's some of the poorest, most grammatically wrong writing I've seen in a while.

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KhanWasHere

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@Richardthe3rd: You must be on the wrong site. This is a gaming site run by interns, not the Wall Street Journal.

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Richardthe3rd

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@khanwashere: being an intern doesn't excuse you from intelligent use of the English language.

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deactivated-5c1c32e0b8cc8

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@Richardthe3rd: Exactly. Thank you.

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knolddasker

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I am amazed that he can predict a stock downgrade in 2018. Especially since its obvious that people are NOT tired of the COD games. Joke aside, i think people are growing tired of the same formular with small changes and high prices, and that it takes no more than 1/2-1 year to make a new COD and release it, so why bother buying it. Also considering RDR2 is due to come out in 2018, off course its gonna affect the game companies, who do not know how to release proper games or take time developing it. They are burning the COD franchise down by how often they release the games and with what content. Learn from Rockstar, they are still making $$$ from Gta5, and not ubisoft, who was almost killing off the assasins creed franchise

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XCrimsonxSynX

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@knolddasker: You do realize that by the end of 2018, it will have been 3 years since Black Ops 3? Although, I do hate how some of the games in past felt like they were copying each other.

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gamingdevil800

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@knolddasker: Rockstar speaking to Activision - "When your done morning Infinite Warfare's failure I'll keep you in black on your behalf."

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twztid13

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Wow, what a bold prediction. I think I'll go out on a limb myself & predict that EA Tiburon will release Madden 2019 next fall. Do what you will with that info, but you're all bound to bank, so just remember who risked insider trading allegations to bring you that scoop.

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DARREN636

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the call of duty thing is over, at last.

but it'll still sell plenty.

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KamiNoBeniMizu

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@DARREN636: Being called to duty is never over. It'll never end, for the world needs us!

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