Electronic Arts Preview: All Eyes On Titanfall

Electronic Arts EA will report its fourth quarter 2014 results on May 6 after market close. Analysts are expecting the company to earn $0.11 per share on revenue of $812.09 million.

The last time Electronic Arts reported its quarter results was on January 28. The company's third quarter 2014 results came in mixed as the company earned $1.26, above the consensus estimate of $1.24. Revenue of $1.57 billion fell short of the $1.66 billion analysts were expecting.

In addition to a revenue miss, Electronic Arts guided its fourth quarter revenue to be $800.0 million and the company also guided towards earning $0.09 per share.

Electronic Arts saw its much anticipated Titanfall game released on March 11.

On April 18, Microsoft said that it had sold more than five million Xbox One consoles since its launch in November. Sony on the other hand, has sold more than seven million PlayStation 4 devices over the same time period.

Gamers adopting PlayStation 4 over Xbox One does not bode well for Electronic Arts due to Titanfall's exclusive release on Xbox One and Xbox 360 consoles.

Wedbush: Titanfall will drive sales

Michael Pacther of Wedbush believes that Electronic Arts will bode well in the quarter, driven by Titanfall and digital sales.

Electronic Arts launched Titanfall for Xbox One and PC on March 11, but pushed the Xbox 360 SKU into Q1:15 for quality reasons,” Pacther wrote in a note to clients on April 29. “At the time of delay, Electronic Arts announced no impact to guidance. We believe EA would have avoided any delay had Q4 been at risk, with the push into Q1 announced roughly 87 percent of the way through Q4.”

Pacther is expecting Electronic Arts to exceed implied digital revenue guidance of $457 million (57 percent of total fourth quarter guidance) through downloadable content, full game downloads, mobile and FIFA Ultimate Team.

Looking forward, Pacther notes that Electronic Arts should guide its full year 2015 revenue to $4.11 billion and earnings per share guidance of $1.52. The strong guidance is a result of the company's busy pipeline throughout the year which includes Dragon Age: Inquisition, a shooter, and The Sims 4.

Bottom line, Electronic Arts has sufficient titles in development to deliver revenue and earnings per share growth for at least the next two years.

Pacther estimated Electronic Arts will earn $0.10 in the quarter on revenue of $820 million.

Shares are Outperform rated with a $37 price target.

Brean: Well positioned into 2015

Todd Mitchell of Brean Capital believes that Electronic Arts is well positioned within the next generation console space to deliver growth in to 2015.

Mitchell sees Titanfall's release as positive, which could support an in-line (or better) fourth quarter result.

“Upside is possible, but may be limited by the exclusivity arrangement with Microsoft and the Xbox One trailing Sony's PS4 in cumulative sales,” Mitchell wrote in a note to clients on April 25.

Titanfall ranked as number one in NPD's March software sales despite the Xbox 360 version yet to be released. This reflects pent-up demand for next-generation consoles according to Mitchell who notes that this “bodes well for Electronic Arts.”

Mitchell notes that if Electronic Arts reports solid fourth quarter results (and full year 2014) it is a sign of a multi-year turnaround. Fiscal 2015 will benefit mostly from sales of Titanfall and FIFA 14, which historically outperforms in years when the World Cup tournament takes place.

Mitchell notes that Electronic Arts has a “solid” pipeline of titles for fiscal 2015, including The Sims (which draws a higher-margin revenue from Origin downloads) and a heavy sports lineup including a UFC game as well as Madden NFL and FIFA.

Mitchell is forecasting Electronic Arts to earn $0.09 per share on revenue of $800.0 million.