ATVI - Activision Blizzard rises as Raymond James upgrades on likelihood Microsoft deal closes

Activision Blizzard ( NASDAQ: ATVI ) shares rose in premarket trading on Thursday as Raymond James upgraded the video game publisher, noting that the likelihood its deal with Microsoft ( NASDAQ: MSFT ) still happens, making the risk-reward at current levels as "solidly to the positive."

Analyst Andrew Marok raised his rating to outperform from market perform, noting that even though Activision Blizzard ( ATVI ) has traded at a discount to the $95-per-share cash offer Microsoft ( MSFT ) made in January, the discount is no longer justified, given improvements in Activision's business.

"In the nine months since, however, trends in the core business have improved significantly, making a price drop on a deal break less precipitous for a standalone Activision share price," Marok wrote in a note to clients.

Activision Blizzard ( ATVI ) shares gained 0.5% to $72.02 in premarket trading.

Earlier this week, Activision ( ATVI ) CEO Bobby Kotick said its planned $69B sale to Microsoft ( MSFT ) remains on track to close in the quarter ending in June.

"We continue to expect that our transaction will close in Microsoft’s current fiscal year ending June 2023," Kotick said in conjunction with the company's third-quarter results on Monday.

On Tuesday, the European Commission said it was opening an in-depth investigation into the proposed deal on fears that the deal may "significantly reduce competition" and worries over AAA-rated games, such as Activision's Call of Duty .

Following the announcement from Europe, Activision Blizzard's ( ATVI ) Kotick said the company would continue to work with the European Commission, as well as work with Microsoft ( MSFT ), to engage with regulators in other countries as they perform their reviews.

Take-Two Interactive ( TTWO ) CEO Strauss Zelnick recently said he had no issues with the Microsoft's ( MSFT ) planned $69B purchase of Activision ( ATVI ) and that most of his competitors feel the same way .

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 . Seeking Alpha's quant system, which consistently beats the market, also rates ATVI a HOLD .

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