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In a report published Wednesday, Monness Crespi Hardt analyst Bill Lennan upgraded the rating on Electronic Arts
from Sell to Neutral.
In the report, Lenna noted, “A series of earnings misses, guide-downs, disappointing games, and a CEO departure (to name a few) have been insufficient to stop the must-own-this-for-the-new-consoles trade. EA's initial FY14 EPS guidance of $1.20 was well above our $0.78 estimate in large part due to assumptions we consider unachievable. However, $1.20 is in the air and our sub-$1.00 estimate, even if it ends up being right, is for now impotent. Wisely, EA kitchen-sinked Q1 June expectations. As usual, September is likely air-tight, as Madden and NCAA football will ship and FIFA, scheduled for the December quarter, can always ship a bit early if September is looking light. As such, while we think EA's FY14 EPS view is aggressive, to say the least, the company has set a very achievable bar for the next two quarters. Any December/March softness is 1) far away; and 2) not even near top of mind for investors, who will increasingly view EA shares as a relatively safe, albeit expensive, way to play the console transition.”
Electronic Arts closed on Tuesday at $18.41.
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