Bright and early this morning, Goldman Sachs downgraded gaming guru Activision Blizzard (NASDAQ: ATVI) from Conviction Buy to Buy. In a note to clients, the brokerage firm explained that it sees greater relative potential for near-term price appreciation in other stocks. Goldman maintains a six-month price target of $16 on ATVI, implying expected upside of more than 29% from the shares' closing price on Wednesday.
ATVI is a ripe target for downgrades, if only because analysts are so lopsidedly optimistic toward the "Guitar Hero" parent. Zacks reports that the equity has attracted no fewer than 18 Strong Buy recommendations, plus two Buys -- with not a single Hold, Sell, or Strong Sell to be found.
Conversely, short sellers have lately taken a shine to ATVI. The number of shares sold short jumped by 18.6% during the most recent reporting period, and these bearish bets now account for 3.6% of the equity's available float. A continuation of this shorting activity could keep the shares under pressure, exacerbating existing technical resistance.
Specifically, ATVI has been stifled by its 20-month moving average since October 2008. This trendline is currently pointed sideways, and it has provided an impenetrable ceiling throughout the past year. With ATVI trading less than one point below this looming roadblock, upside could be severely limited during the near term.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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