Wedbush Morgan analyst Michael Pachter lowered his 12-month price target for both Activision Blizzard and THQ shares on Monday, citing "market contraction."

Despite Activision Blizzard's strong performance and promising slate of upcoming titles in the Warcraft, Guitar Hero, Bond and Call of Duty franchises, he trimmed his price target to $18 from $22.50.

"This is at the lower end of Activision’s historical multiple range to reflect recent market valuation contractions," he wrote in a research note.

"We believe that Activision provides a large cap alternative for investors interested in exposure to the videogame business. The company is well managed, and we believe that it is well positioned to deliver sustainable, predictable revenue and earnings growth, warranting a premium valuation."

He rates the company's stocks as a "strong buy." Activision Blizzard will be announcing its Q2 earnings on November 5.

Ahead of fiscal Q2 results, Pachter lowered his 12-month price target for THQ to $14 from $22, citing again "recent market contraction," but also "poor execution for the last 18 months."

He also lowered FY09 estimates for the company to $1.1 billion from $1.16 billion, missing corporate guidance. Pachter still rates THQ shares as "strong buy."

THQ recently released Saints Row 2 and De Blob.