Technology giant Microsoft Corp. (NASDAQ:MSFT) is offering additional concessions to gain regulators’ approval for its much-awaited takeover of ace game developer Activision Blizzard (NASDAQ:ATVI). In its latest effort, Microsoft has promised to provide rival Nintendo Co. (DE:NTO) with decade-long access to its popular “Call of Duty” game on its Switch.
Earlier, Microsoft also vowed to provide the game to Sony Group Corp. (NYSE:SONY), which is the biggest critic of the acquisition. The $75 billion deal is being probed by regulators worldwide for the possibility of thwarting competition. Should the deal be approved, Microsoft will deliver the “Call of Duty” games on both XBOX and PlayStation, as well as the Nintendo Switch.
Supporting the company’s pledge to allow the game on other consoles, Brad Smith, vice chairman and president of Microsoft said, in a WSJ article, “Given the popularity of cross-play, it would also be disastrous to the ‘Call of Duty’ franchise and Xbox itself, alienating millions of gamers.”
Remarkably, the Federal Trade Commission (FTC) is expected to give its decision on the Microsoft-Activision deal by January, and Microsoft is leaving no stone unturned to win the regulator’s favor.
Is Microsoft an Overvalued Stock?
Microsoft trades at a forward price/earnings per share (P/E fwd) multiple of 25.71x, which is higher than the sector median but lower than its five-year average of 29.11x. This implies that MSFT stock is undervalued relative to its own past performance.
Also, Wall Street analysts are highly bullish on MSFT stock with a Strong Buy consensus rating. This is based on 26 Buys and three Hold ratings. On TipRanks, the average Microsoft stock prediction of $295.38 implies 20.5% upside potential to current levels. Meanwhile, the stock has lost 26.1% so far this year.
