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Bank Of America: Q3 'Tracking Well' For Electronic Arts, Hikes Price Target


Justin Post of Bank of America commented in a note on Friday that Electronic Arts Inc. (NASDAQ: EA) is setting up for a “solid” third quarter.

Post notes that Electronic Art's retail sales were down 29 percent year-over-year in the third quarter, marking an improvement from October as the company did not have a shooter title to comp against last year's "Battlefield 4" release. The analyst adds that "Dragon Age" sales were in-line with the prior version and that its Sports title sales remain higher year-over-year.

Post states that NPD's data shows Electronic Art's U.S. and U.K. retail sales were down 36 percent in the quarter, better than the 40 percent the analyst previously estimated.

“We remain positive on the margin expansion opportunity from a favorable Digital revenue mix and cost controls and think Electronic Art's packaged revenue could grow year over year in fiscal 2016,” Post wrote.

The analyst raised his price target on shares to $47 from a previous $40 based on a 19x multiple on a higher fiscal 2016 earnings per share estimate of $2.45.


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