Stifel Remains Bullish On EA Despite Expectation For Light FY17 Outlook

Stifel remains bullish on Electronic Arts Inc.

despite expectations for light FY17 guidance, while estimating fourth quarter earnings above consensus. Commenting on the potential FY17 outlook, analyst Drew Crum said: "[W]e expect management to provide a slightly more subtle view relative to consensus, which could create some volatility around earnings." According to a note from the analyst, the light guidance could be based on the timing of game releases, planned investment spending, or just conservatism. Electronic Arts is expected to report its fourth quarter financial results on May 10th. Street expects earnings of $0.42 a share on revenue of $889.87 million. Crum projects non-GAAP EPS of $0.44 on revenue of $898 million. Crum noted that the "gains from the ongoing mix shift to higher margin digital will likely be offset by the release of Battlefield Hardline in the year ago period." Crum cut non-GAAP EPS view to $3.08/$3.65 for FY2016-'17, respectively. Earlier, the analyst had expected EPS of $3.10 and $3.73, respectively. Street expects EPS of $3.06 for FY2016 and $3.52 for FY17. The analyst also noted that EA's investor day on May 17th could be a catalyst for the stock as the event address several topics including its digital strategy, the FY2017-'18 slates, and plans for the balance sheet/return of cash. "We believe the shares could be volatile around earnings, but anticipate a good bit of (positive) news flow afterwards, and thus would initiate/add to positions on weakness," said Crum who rates the stock Buy with a price target of $81. Shares of Electronic Arts were up 1.60 percent to $62.84.