Brean Capital Reiterates Buy Rating, $19 PT on Electronic Arts

In a report published Friday, Brean Capital reiterated its Buy rating and $19.00 price target on Electronic Arts EA. Brean Capital noted, “EA should benefit in the console transition from new digital revenue streams and an expanded line-up. We are trimming our F3Q13 EPS estimates for EA to $0.52 from $0.55, due to even worse-than-expected Medal of Honor sales and generally weak video game sales this holiday season. However, we are maintaining our F4Q13 estimate of $0.76, as we believe deferred digital revenue from Battlefield 3 is ahead of target. We see some risk of EA lowering its F2013 guide from $1.00-to-$1.15, but we think results will still come in north of $1.00. Our fiscal 2013 EPS estimate falls to $1.02 from $1.05, up 20% from $0.85 in F2012. Moreover, unlike Activision (ATVI $11.35, Buy), we continue to see the potential for EA to generate upwards of 20% EPS growth in F2014 from new digital revenue streams and an expanded lineup with a strong FPS comp (Battlefield vs. Medal of Honor), the addition of UFC and NBA to EA Sports, and incremental sales from Dragon Age and a potential new release from BioWare. Given the potential for EA to generate solid EPS growth in F2014, and the stock's PEG discount, we reiterate our Buy rating and $19 price target.” Electronic Arts closed on Thursday at $14.26.