MoffettNathanson weighed in on the video game stocks, giving Take-Two and Activision buy ratings and Electronic Arts a neutral.<\/p>\n
Analysts on Thursday highlighted three "mega trends" over the past decade: digital distribution, in-game purchases and successful franchises such as Activision's World of Warcraft and Take-Two's Grand Theft Auto.<\/p>\n
But, while markets have reached records, these stocks are still off their highs hit early this year, with consumers getting out of the house and away from their consoles.<\/p>\n
Look for long-term opportunity even in the face of near-term weakness, said Boris Schlossberg, managing director of FX strategy at BK Asset Management.<\/p>\n
"Short term you certainly had a huge amount of pull forward demand from the pandemic, and everybody now is ready for a little bit of sunshine and air," Schlossberg told CNBC's "Trading Nation" on Thursday. "There's probably going to be a natural move back in the stocks as the average play per hour per user is going to probably come down."<\/p>\n
Electronic Arts is the closest to its highs, down roughly 8% from a January peak. Take-Two is the furthest, nearly 19% below its February high.<\/p>\n
"I actually think all three of them are fine buys at this point as long as you have a long-term, let's say, two- to four-year timeframe, especially with something like Take-Two. \u2026 The Grand Theft Auto franchise has already earned $10 billion," said Schlossberg. "The whole dynamic of the gaming industry remains very, very bullish, it's a long-term buy, and whatever dip we have right now is just an opportunity to get longer."<\/p>\n
Matt Maley, chief market strategist at Miller Tabak, is watching key levels in two of the stocks he sees as most appealing \u2013 Activision and EA. \u00a0<\/p>\n
"Look at Activision, first of all. The stock looks like it's making what you would call a double head and shoulders pattern. So if it does break below the neckline, which is right near its 200-day moving average, that's at about $89 \u2026 you want to walk away from the stock, and look for a reentry point at a lower level," Maley said during the same segment.<\/p>\n
However, he sees that as strong support and unlikely to break, pointing out that it did not move below its 200-day moving average even during the Covid pandemic lows last year. Activision closed Thursday at $92.51.<\/p>\n
As for EA, Maley said it's beginning to break below the bottom end of an "ascending triangle pattern," formed from a series of higher lows and a level of resistance. \u00a0<\/p>\n
"It's only a slight break, and if it falls further again you might want to back away a little bit. But, if you buy it on weakness as Boris suggests, don't be afraid to add to it. If and when it breaks above that range of $145 to $150, that's been really tough resistance, so once it breaks above that level at some point in the future, it's going to take off like a rocket ship," Maley said.<\/p>\n
EA closed Thursday at $138.65 a share.<\/p>\n
Disclaimer<\/p>\n