EA's Prospects Keep Rising

• Electronic Arts Inc. EA shares have surged 60.53 percent year-to-date, reaching a high of $76.77 on October 28.
• MKM Partners Eric Handler has maintained a Buy rating on the company, while raising the price target from $82 to $84.
• The company has reported robust Q2 results and has raised its FY16 guidance.

Analyst Eric Handler expressed optimism regarding the company’s revised full-year guidance, given that there have been additional headwinds due to higher negative impact of FX, Mirrors Edge being shifted from 4QFY16 to 1QFY17 and a pull forward of revenue worth $30 million from Ultimate Team into Q2.

“Management did increase its Star Wars Battlefront outlook to 13mn units from 9mn-10mn units and given its conservative nature, likely leaves room for additional upside potential,” Handler stated.

Electronics Arts reported outperformance across all key metrics for Q2, with the revenue outperformance being driven by lower than expected decline in physical sales, along with a 6 percent increase in digital sales.

For FY16, the revenue estimates has been marginally lowered to reflect the shift of Mirrors Edge to 1QFY17, while the EPS estimate had been raised.

The FY17 revenue and EPS estimates have been raised to reflect “strong flow through from Star Wars and the addition of Mirrors Edge to the already impressive FY17 launch slate.”

The 4QFY15 revenue and EPS estimates have, however, been lowered.