Activision Blizzard (NASDAQ:ATVI) is on the verge of releasing a flurry of new content that should drive results in Q3 and Q4. Names on the roster include new releases in the Call of Duty, World of Warcraft, and Overwatch brands. Moffet Nathanson recently upgraded the stock citing a 20% discount on the Microsoft offer.

The FTC has to decide if Microsoft’s acquisition will give them enough leverage to run rough-shod over competitors like Sony and Nintendo. More likely, the deal will allow Microsoft to compete better within the industry and that is good for investors and gamers alike. Activision Blizzard did not report a robust 2nd quarter but it was good enough considering the multi-year downturn in the gaming industry.

The company reported $1.64 billion in net revenue for a decline of nearly 15% over last year. The operating margins contracted to 21% GAAP and 28% on an adjusted basis to leave the adjusted EPS at $0.48. Activision and Blizzard both saw a YOY decline in revenue and earnings but sequential growth.

Activision Blizzard is not a high-yield name with a distribution yield near 0.6%, but it is a safe payout and growing at a robust rate. The company is paying out only 17% of its earnings and has a strong cash flow and balance sheet to back it up.

Shares of Activision Blizzard have yet to reach the deal price. The price action is hovering well below that level but is showing strong support. If the MSFT deal doesn't go through, Activision Blizzard should make another increase at the end of the fiscal year and it should be in the range of 15% if not higher.
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