Activision Blizzard upgraded as MKM says stock 'severely discounting' fundamentals
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Activision Blizzard (NASDAQ:ATVI) received an upgrade from MKM Partners on Tuesday, as the investment firm said the stock of the video game publisher is "severely discounting" the improvement in fundamentals. 
Analyst Eric Handler raised his rating on Activision Blizzard (ATVI) to buy from neutral, noting that in addition to the improvement in fundamentals seen this year, the company is likely to see "strong growth potential" next year thanks to games such as Call of Duty: Modern Warfare II, Call of Duty: Warzone 2.0, Overwatch 2, and World of Warcraft: Dragonflight.
Paced by these releases, Handler noted that "Activision is on track to return to top and bottom line growth for the first time in a year."
However, Handler noted that Activision (ATVI) shares continue to be linked to the perception of whether its deal to be acquired by Microsoft (NASDAQ:MSFT) gets approved, which the analyst believes it will.
If the deal does not get approved, however, Handler noted that shares should be worth $85, trading at 18 times 2023 earnings, plus $13 per share in cash.
Activision (ATVI) CEO Bobby Kotick recently said its planned $69B sale to Microsoft (MSFT) remains on track to close in the quarter ending in June.
In addition, Handler also noted that the company's recent third-quarter results were a positive surprise, with the outperformance led by bookings in all three operating segments, strong gross margins and lower operating expenses.
Activision Blizzard (ATVI) shares were fractionally higher in premarket trading on Tuesday.
On Monday, it was reported that Warren Buffett's Berkshire Hathaway (BRK.B) (BRK.A) slightly pared its position in Activision Blizzard (ATVI) in the third-quarter, while making several other changes to its portfolio. 


Analysts are mostly positive on Activision Blizzard (ATVI). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, also rates ATVI a HOLD.