Strong Guidance Likely In Electronic Arts Report

Wedbush’s Michael Pachter expects Electronic Arts Inc. EA to deliver “significant growth for the foreseeable future driven by cost discipline, digital sales growth, and impressive franchises including Battlefield, Titanfall, the Star Wars games, and FIFA Mobile.”

The analyst maintains an Outperform rating on the company, with a price target of $95.

Q3 Expectations

Electronic Arts is scheduled to report its Q3:17 results after the close on January 31, and Pachter expects upside to the quarter to be driven mainly by "Battlefield 1."

The analyst estimates that the company will report its revenue and EPS at $2,100 million and $2.35, respectively, beating the consensus expectations.

Pachter expects the Q3 sell-in for "Battlefield 1" at 16 million units and for "Titanfall" at 6 million units, and notes that “EA guidance for the full year factored in 12.5 million units for Battlefield 1 and 10 million units for Titanfall 2, meaning that the games may have met their combined contribution target a full quarter early.”

Robust Guidance Expected

The analyst expects management to pass through most of the Q3 upside to the FY 2017 guidance and stated that “EA could maintain guidance should it delay Mass Effect: Andromeda out of FY:17.”

The inclusion of the game in FY 2017 appears to suggest that Electronic Arts is confident that catalog sales, digital and the FY 2018 release slate are robust enough to drive continued earnings growth.