ATVI - Benchmark trims Activision Blizzard forecast but sees upside deal or no deal

Benchmark has cut full-year growth estimates for Activision Blizzard ( NASDAQ: ATVI ), but it still sees room for upside even in what it considers the likely event that an acquisition by Microsoft ( NASDAQ: MSFT ) falls through.

The videogame maker reports earnings on Feb. 6, though it won't be offering guidance or holding a call due to the pending acquisition. Microsoft's proposed takeout price of $95 per share implies 29% upside from current pricing.

That suggests the market is pricing in an 18% probability of deal success, analyst Mike Hickey said.

Still, the company rolled out a significant game pipeline for the fiscal fourth quarter and for fiscal 2023 that should drive growth, he said: "We think investors will either be rewarded" through the $95 takout price or Benchmark's $90 target, which still implies about 22% in case the deal is blocked due to antitrust laws (in which case Microsoft ( MSFT ) pays a termination fee of $2.5B-$3B).

Both the Call of Duty and World of Warcraft franchises had "strong new releases" that will boost the holiday quarter, but Benchmark is cutting this year's growth estimates over concerns about macro pressures and the anticipated impact of Blizzard suspending game services in China this month .

Hickey sees that impact this fiscal year amounting to $250M in net bookings, and adjusted earnings per share of 23 cents.

Analyst consensus is for Activision Blizzard ( ATVI ) to post earnings per share of $1.51 with bookings coming in at $3.16B.

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