The approval of an acquisition by Microsoft could mean a nice jump for Activision Blizzard shares, Atlantic Equities says. Analyst Kunaal Malde upgraded the video game stock to overweight, citing the potential purchase by Microsoft and the company’s strong content pipeline. “We view the risk/reward as positive and our reduced $84 PT assumes a 50% probability the $95/share deal completes while valuing the standalone company at $73/share,” he said. “In a tough economic backdrop heading into recession, this unusual setup should prove relatively attractive.” Shares of Activision Blizzard are up more than 15% this year but could gain another roughly 10% from Wednesday’s close even after the firm trimmed its price target to $84. Approval of the acquisition at $95 a share would suggest a 24% upside for the stock. Malde also said the company should be in a strong position even if the deal is not approved, noting that Activision has “started delivering on its strong content pipeline, which should see the company return to meaningful growth in CY23.” In the same note, Malde downgraded shares of Electronic Arts to neutral despite the stock’s outperformance this year. He cited risks to the company’s content release slate in the fourth quarter and foreign exchange headwinds. Shares of the video game stock are down just 3.8%, while the S & P 500 has slumped 17.2%. — CNBC’s Michael Bloom contributed reporting
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