Activision Undervalued? - 1:40 AM EST - TK
Our old friend Activision (ATVI) is covered nicely on Business Week Online. Compared to industry leader Electronic Arts, the company may be undervalued, especially with future growth prospects.
It's true that several analysts think Activision is worth quite a bit more that its current price. "A lot of the p-e's were ridiculously high," says Sean McGowan, an analyst with Gerard Klauer & Mattison, referring to the video-game sector's heyday. "Now I think the p-e's are ridiculously low." Activision is much cheaper than the leader in the industry, Electronic Arts (ERTS), which currently has a p-e of 43 and a projected year 2000 multiple of 23, and is expected to grow at the same rate as Activision, according to research from Piper Jaffray. "Now they are now poised and ready for tremendous growth," says Lin, who faults the company only for not doing a better job of explaining its change in strategy to the investing public. His 12-month price target is $16 to $18 (so is McGowan's). That may not sound high, but analysts are ready to raise those estimates if earnings come in stronger than expected. Kotick believes that passing the $500 million mark in revenues, which Activision will do this year, will prove to investors that it is ready for the big time. - Business Week |
