It’s no secret by now that a majority of the market’s sectors have been impacted, in some way or another, by the pandemic. However, the video game industry has seen an almost opposite effect take hold, having profited from worldwide stay-at-home and lockdown regulations. As more individuals were forced to comply with social distancing, more people began to have the time to play the games they couldn’t previously, resulting in a $162.32 billion worldwide gaming business last year. Game downloads increased by 75% globally from 2019 to 2020, while live stream view time increased by 45% during the same period.
The gaming business experienced extraordinary development during the pandemic, as older players who had not been able to find the time to play games before the lockdowns were now able to join the fun. This demographic has been a welcome inclusion, right next to regular gamers and even heavy gaming addicts. An example of such success is that last June, gaming giant Electronic Arts Inc. (EA) announced its best quarterly sales in the company’s 38-year history, as more consumers were forced to stay at home and entertain themselves. The firm reported a staggering 87% rise in net bookings during the quarter, surprising everyone, even corporate officials who stated the June quarter was one of their slowest.
It is not surprising that the gaming business is seeing such growth, given its growing appeal among youngsters and adults alike. This year, Bloomberg predicted that the video and mobile gaming sector might be one of the most profitable on Wall Street. They pointed out that many first-generation players are now adults with significant video game knowledge and buying power and that gaming can no longer simply be dismissed as a teenage hobby.
Let’s have a brief look at just a few stocks from the gaming sector that analysts consider to be smart portfolio picks…
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Take-Two Interactive Software Inc. (TTWO)
TTWO is a company that develops, markets, and publishes interactive software for various forms of gaming. Its goods are available through physical retail, digital download, online platforms, and cloud streaming services. They are designed for consoles, portable gaming devices, and personal computers, including smartphones and tablets. Ryan A. Brant started the firm in 1993, and it is based in New York, NY. Their well-known labels include Rockstar Games, 2K, Social Point, and Playdots.
The firm reports again in November, but their most recent quarterly earnings exceeded expectations by showing $813 million in revenue, a diluted EPS of $1.30 per share, and a profit margin of over 18%. TTWO has a median price target of 216.00, with a high of 253.00 and a low of 175.00, among the analysts who provide 12-month price forecasts. The median estimate is up an impressive 34.66% from the stock’s most recent price. Based on the optimistic forecasts (annual and quarterly) for EPS and sales, and the stock’s existing performance, the confident consensus among polled experts is to buy stock in TTWO.
Activision Blizzard Inc (ATVI)
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Activision Blizzard, Inc. is a company that develops and publishes interactive entertainment. Activision Publishing, Blizzard Entertainment, and King Digital Entertainment are the company’s three sectors. The Activision Publishing division creates and distributes interactive software and entertainment material, mostly for consoles. Blizzard Entertainment is a division of ATVI that creates and distributes interactive software and entertainment material, mainly for the PC platform. The King Digital Entertainment sector creates and distributes interactive entertainment content and services, focusing on mobile devices like Android and iPhones. The firm was established in 1979 and is based in Santa Monica, California. A few of their well-known titles include Diablo, Call of Duty, and War of Warcraft.
ATVI reported $2.30 billion in sales for their second quarter, up to $161 million from projections. Activision’s net bookings of $1.92 billion were $71 million more than the company’s forecast. ATVI reports again in November but has shown positive Revenue and EPS growth in the meantime. The analysts offering 12-month price forecasts for ATVI have a median price target of 117.00, with a high of 153.60 and a low of 100.00. The median estimate represents a 37.36% increase from its last price. Its most recent dividend yield was 1.4%. The strong consensus among analysts is to buy ATVI shares.
Zynga Inc (ZNGA)
Zynga, Inc. is a company that specializes in social gaming. It creates, promotes, and runs social games as live services for mobile platforms like Apple’s iOS and Google’s Android operating systems and social networking sites like Facebook. Chess with Friends, Draw Something, FarmVille, Ice Age: Arctic Blast, Looney Tunes Dash, What’s The Phrase, Wizard of Oz Magic Match, Yummy Gummy, Free Slots, Black Diamond Casino, Zynga Poker, and Willy Wonka Slots are just a few of the popular games available. Mark Jonathan Pincus founded the business on April 19, 2007, based in San Francisco, California.
As with TTWO and ATVI, ZNGA also reported their Q2 earnings recently and are set again to notify on Nov 3rd. For their report ending June 30th, they boasted $720 million in revenue and $27.8 million in net income, with a profit margin of 3.86%. Existing performance evidence is solid, the outlook is good, and the stock is relatively cheap compared to some other gaming stocks. The median 12-month price target for ZNGA among analysts is 12.00, with a high of 15.00 and a low of 9.00. From its most recent price, the median estimate indicates an impressive increase of 47.97%. The experts have recommended their stock for a well-earned time now, and the consensus continues to give ZNGA a strong buy rating.
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