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Improvements in video game designs will provide "another strong year" for the $15 billion sector, an analyst said Monday, although industry sales were unchanged last year.

Brean Capital's Todd Mitchell reiterated Buy ratings on three big names in the group, offering praise for new releases from two: Electronic Arts Inc. (NASDAQ: EA) and Activision Blizzard, Inc. (NASDAQ: ATVI).

For both companies, "game quality is up across the board," Mitchell said. "Each is coming into their own," obtaining advantage from improved game consoles and also in new offerings for mobile platforms, according to Mitchell.

Related Link: E3 2015: What's Coming For Nintendo?

The analyst maintained a $68 target on Electronic Arts and called its "Star Wars: Battlefront" game "fun as hell." Mitchell said the game is superior to its 2014 iteration.

Activision's $28 target from Mitchell is also unchanged and he said the company's "Call of Duty: Black Ops" game "remains on top."

Mitchell reiterated a Buy rating and $32 target on Take-Two Interactive Software, Inc. (NASDAQ: TTWO) but didn't comment on its products.

Industry Overview

Computer and video game sales hit a 2010 peak of $17.1 billion, falling nearly 10 percent by 2014, according to the Entertainment Software Association.

Industry sales of $15.4 billion were flat last year compared with 2013, according to the group.

But Mitchell said 2015 "should be another year of strong industry fundamentals and outperformance for the group."

Electronic Arts shares are up about 33 percent year-to-date, while Activision has gained about 23 percent.

EA sales grew more than 28 percent last year to $4.52 billion; Activision sales fell 2 percent to $4.41 billion.

Take-Two shares are off more than 1 percent since December 31. Its sales last year fell 54 percent to $1.08 billion.

Editor's note: A previous version of this story said Todd Mitchell had a $22 price target on Take-Two.

Posted-In: Brean Capital Todd MitchellAnalyst Color Reiteration Top Stories Analyst Ratings Tech Best of Benzinga


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