Ahead of the Bell: Analyst raises Activision price target

Piper Jaffray analyst Anthony N. Gikas boosted his price target on the Santa Monica, Calif., company to $35 from $31 and placed Activision on Piper Jaffray's Alpha list.

He kept a "Buy" rating on the shares.

The new target implies he expects shares to jump 29 percent above Friday's $27.16 close, and the Alpha grouping is a list of stocks expected to perform well over a short-time period.

Activision makes the widely popular "Guitar Hero" video game franchise, as well as the "Call of Duty" game series and other forms of electronic entertainment. The company is set to be acquired by Vivendi SA to form the world's largest online and console game publisher.

The company may prefer that current shareholders not participate in the $4 billion all-cash tender offer expected as the deal closes, and may move to boost shares above the tender price by releasing upbeat guidance, he said.

For the fourth quarter, Gikas raised his outlook to profit of 9 cents per share from 8 cents per share, and revenue outlook to $410 million from $400 million.

Analysts polled by Thomson Financial expect, on average, earnings of 5 cents per share on revenue of $364.8 million.

Activision is set to report fiscal fourth-quarter and annual results on Thursday.

Shares fell 29 cents to $26.87 in premarket trading Monday.