Following NPDs latest data showing Activision sales rising 39 percent to $116 million on the strong performance of Guitar Hero II
, Wedbush Morgan's Michael Pachter says the firm is "more bullish than ever about Activision as an investment."
The results of Activision's first quarter are "stronger than expected," says Pachter, with sales rising from last year's $84 million to $116 million, which, combined with this week's European PS3 launch, leads Wedbush to believe the company's estimates are "way too low."
As a result, Wedbush has raised its Q4 sales estimates from $205 to $250 million, and note that the company will be involved in distributing a portion of Sony's PS3 hardware in Europe, a deal that Pachter believes could "generate as much as $20 – 30 million in incremental revenues year-over-year for the quarter."
On the software side, the strong sales of Guitar Hero II
"bodes well for continued strong sales leading up to the April release of Guitar Hero II
for the Xbox 360."
Pachter continues that sales of the 360 version could "substantially exceed street expectations," especially in light of the fact that several other recent 360 titles have sold more than 325,000 in their first month, saying he would not be surprised to see the game sell through 400,000 units (at $89.99) in April."
"Our positive long-term thesis on Activision is reinforced by the company’s recent performance," concludes Pachter, "and if anything, we are more bullish than ever about Activision as an investment. We believe that the current share price presents a compelling entry point for Activision shares, and recommend that investors opportunistically add to positions. We believe that consensus expectations inappropriately overlook the strength in the company’s business, and believe that recent sales momentum will carry into FY:08."