Activision Blizzard, Inc. (ATVI): This Company Is a Buy (But Not Today)

If gamers decide not to upgrade en masse, Activision and its peers will have a challenge to develop games for the PS3 and Xbox 360, along with the PS4 and Xbox One. Developing for two systems is challenging enough. Developing for four (and don’t forget the Wii and Wii U) or more is another issue all together.

Not A Buy Yet

The good news for long-term Activision Blizzard, Inc. (NASDAQ:ATVI) investors is that the company’s core franchises — Call of Duty, Skylanders, World of Warcraft, Diablo, and Starcraft — are doing well. The bad news is, the biggest time of year for sales isn’t until nearer to the end of 2013. Call of Duty: Ghosts is due out at the beginning of November, and the two new consoles are due out sometime later this year. Activision should do well next year, as this year’s natural trough in earnings will be behind the company, and earnings comparisons should be easier. That said, at over 18 times earnings, it seems like investors think the end of this year is already here. It’s likely to be a tough summer and fall, because many other activities take away time that would otherwise be used for gaming. I would wait for a pullback in Activision shares before jumping in.