Lazard: Activision Up On GameStop Results, Spider-Man Buzz

Analyst firm Lazard Capital Markets has increased its fourth quarter estimates for major publisher/developer Activision, citing the overwhelmingly positive financial results posted yesterday by GameStop, as well as “strong momentum” for the company's key franchises. In his latest research note to investors, Lazard analyst Colin Sebastian raised the firm's fourth quarter estimates for Activision to $225 million, up from $200 million, due primarily to sales of titles such as Guitar Hero II and those in the Call of Duty franchise. His statements echo those of fellow analyst Wedbush Morgan's Michael Pachter, who recently commented that the firm is "more bullish than ever about Activision as an investment." However, Sebastian added, “While further upside to our estimates is possible,” the continuing scarcity of the Wii and Nintendo DS at retail could “slightly” impact Activision's March sales. In addition, following statements made by GameStop that indicated a PlayStation 3 European launch that was “very good, but not great,” Sebastian noted that Lazard is “currently modeling $77 million in F4Q revenues for Activision’s distribution business, accounting for one-third of overall sales, and increasing 24% over last year.” He added: “We note that one of Activision’s subsidiaries is the exclusive distributor of PlayStation products to the independent retail channel in the U.K.” Looking ahead to fiscal 2008, the analyst firm believes that Activision is “well positioned for strong growth,” with much of this growth being driven by first quarter movie tie-ins Spider-Man 3 and Shrek the Third, as well as the upcoming Xbox 360 version of Guitar Hero. “Our checks also indicate positive early feedback on the Spider-Man movie, which may also bode well for initial game sales,” wrote Sebastian. Other titles expected to perform well for the company in the coming year include the PlayStation 2 version of Tony Hawk’s Downhill Jam and the long awaited PC shooter Enemy Territory: Quake Wars, both of which are expected around the May time frame.