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The analysts told investors in a note Monday that they believe “investors will either be rewarded with an approximate 21% upside to MSFT’s $95 bid or an approximate 15% upside to our FY23 $90 PT if the deal is abandoned.”
“ATVI is delivering on a meaningful product cycle that should drive record growth over the medium term,” they wrote. “We expect a significant near-term growth catalyst from Diablo IV launch on 06-06, which will include a Live Service model that should benefit profitability FY24.”
However, Benchmark is cautious that ATVI’s F2Q23 operating income will be impacted by marketing and software amortization related to the Diablo IV’s launch.
Elsewhere, they believe Microsoft (NASDAQ:MSFT) could be successful on appeal with the Competition Appeal Tribunal (CAT) after the UK blocked MSFT’s planned acquisition of ATVI over concerns it would hinder competition in cloud gaming.
“We think the facts and EU decision are both on their side, and CAT has overruled CMA in other cases. The deal would appear to be a political firestorm within the UK, CAT could be the offramp CMA needs on a decision and related narrative that has put them in a bind,” the analysts concluded.
