UPDATE: Brean Capital Reiterates on Electronic Arts as Surprising Beat and Raise Signals Better Things Ahead

In a report published Wednesday, Brean Capital analyst Todd Mitchell reiterated a Buy rating on Electronic Arts EA, and raised the price target from $29.00 to $32.00. In the report, Brean Capital noted, “EA reported better-than-expected F2Q14 results in a soft environment for video game sales and raised its non-GAAP EPS outlook for fiscal 2014. Each of EA's sports titles released in the quarter, except for FIFA, generated lower packaged goods sales. However, EA was able to report upside to margins and non-GAAP EPS due to an 11% increase in digital revenue, driven in part by a strong uptick for FIFA Ultimate Team, and management's ongoing efforts to reduce operating expenses. We think this gives credibility to EA's long-term goal of reaching a 20% operating margin, while the recent announcement to pull forward the highly anticipated Titanfall into F4Q14 backstops guidance and will help the company navigate what it likely to prove to be a turbulent back half of the fiscal year. Given EA's strong base of existing franchises and intriguing pipeline of new IP, its ability to drive operating margin improvement, and new management's seemly adroitness in navigating in a challenging environment, we believe EA offers the greatest potential for upside of the group. As a result, we are raising our price target to $32 from $29, and we reiterate our Buy rating.” Electronic Arts closed on Tuesday at $24.13.