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This Analyst Still Loves EA Stock, But Why?

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In a report published Wednesday, Wedbush analyst Michael Pachter maintained an Outperform rating for Electronic Arts Inc (NYSE: EA), with a price target of $55. Pachter cut his FY16 estimates to reflect the impact of foreign currency translation.

The revenue and EPS estimates for FY16 have been reduced from $4,800 million to $4,525 million and from $2.75 to $2.60, respectively. Pachter expects to revise the estimates once again next month when Electronic Arts issues guidance for the year.

In the report Wedbush noted, "EA's strong presence on the next-gen consoles positions the company to thrive in coming years. FY:16 is expected to feature incremental releases Mass Effect 4, Mirror's Edge 2, a new Need for Speed game, and Star Wars: Battlefront, as well as meaningful re-orders for Battlefield Hardline, which launched in late Q4:15…the bulk of sales could be recognized in FY:16."

The analyst expects the company's digital revenues to continue to grow and believes that Electronic Arts is poised to leverage an expected uptick in game sales, with next-gen consoles "off to a solid start."

"We believe EA represents a solid opportunity for investors to benefit from continued digital growth for the industry over the next several years, as well as from a likely rebound in packaged goods sales as software sales gains for the new consoles are expected to more than offset declines in legacy software sales." Pachter added.

Posted-In: WedbushAnalyst Color Reiteration Analyst Ratings

 

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