Activision-Blizzard | US Banks Rebound | CPI Print

15 March 2023

Stock in focus: Activision-Blizzard (ATVI)

Microsoft cleared another hurdle towards its planned $75B acquisition of gaming giant Activision-Blizzard. It signed a deal with the cloud gaming company Boosteroid to distribute the popular “Call of Duty” games. “Call of Duty” is the lynchpin which can make or break Microsoft’s acquisition of the gaming giant – competitors argue that Microsoft’s control of Activision gives it too much sway over the market, which regulators have highlighted as a concern. So far Microsoft has reached similar deals with Nintendo & chipmaker Nvidia – the one hold-out is Sony, whose business would be most impacted by the acquisition. Activision recently cleared some preliminary hurdles with EU regulators – likely the hardest regulator to please will be the UK’s, who prefers divestments as opposed to trade-agreements. We think this news is softly positive — we continue to rate ATVI a buy as an arbitrage situation – currently investors can make 20% on the company’s current price vs. Microsoft’s bid of $95.00 per share.


NZ Market Movers

Slow day of trade on little news. Fisher and Paykel Healthcare’s Airvo 3 is expected to launch in the US in May, which should drive higher sales alongside growing momentum in China. The stock isn’t cheap but we continue to rate it a buy upon the quality of its business. We’re all waiting on Pushpay news — should know by end of day – we think if there is a new bid it looks like $1.50-$1.55. Synlait Milk reduced its forecast milk price down to $8.50/kgMS – two sides of the China story here – Chinese demand for F&P equipment is growing but demand for milk product is slowing in spite of the Chinese economy reopening. We note that NZ house prices fell 13.9% for Feb YoY.


Australian Market Movers

Heavy volume day on the ASX – $10.5B in shares traded. We note that Tabcorp is considering a bid for Pointsbet’s Australian arm, whilst Paladin Energy is rumored to be of interest to a Japanese trading house.

The Australian Market (ASX200-1.4%) fell to a 10-week high as investors become more nervous, with all sectors down and tech, energy and materials the hardest hit.

Bank stocks also suffered significant losses, but we think the Australian banks are much better capitalised, we see this as an opportunity to pick up some ANZ and WBC shares, our preferred banking picks currently, while keeping an eye on Macquarie as next on our list.


US Market Movers

The S&P rebounded +1.68% as pessimism from regional banks (SVB fallout) reversed. We wrote up Charles Schwab yesterday as a stock we liked as a buy – it’s rebounded +9.19%, whilst Citi stock rebounded +5.95%. Not bad for a day’s work. CPI print came in hot which we find more concerning – suprercore CPI (core services less housing) reaccelerated +0.5% vs +0.36% in January – going in the wrong direction: the Fed is stuck in between a rock and a hard place. Higher rate hikes caused the collapse of SVB, but on the other hand the Fed pausing rates now will likely result in stickier inflation.

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