Market Overview

Oppenheimer Is Buying EA On Dip, Says 'Battlefront' Fears Overdone

  • Shares of Electronic Arts Inc (NASDAQ: EA) have been rising steadily since January and are up 45 percent year-to-date.
  • Oppenheimer’s Sean McGowan maintained an Outperform rating on the company, with a price target of $83.
  • The recent weakness in shares offers an attractive buying opportunity, McGowan stated.

Electronic Art’s shares have come under pressure due to concerns over Star Wars: Battlefront not meeting sales expectations. Analyst Sean McGowan termed the recent sell-off as “excessive.” The pullback came after GameStop Corp. (NYSE: GME) noted that Battlefront’s sales were short of retailer expectations.

“We believe the selloff is excessive, and that the title will sell strongly in the coming months. We recommend investors buy on the weakness,” McGowan stated. He added that GameStop too had announced that it expects the Battlefront title to be a top seller and pick up momentum.

The analyst expects the Battlefront game to get a fillip from the new Star Wars film, opening in theaters in a few weeks.

Leaks of GameStop’s plans to feature Battlefront in its Black Friday sales and offer discounts may have reduced the demand for the title ahead of Black Friday. The analyst noted that the low sales may also be because an increasing number of customers are choosing to buy online.

“We expect SW:BF to sell well enough for EA to meet its guidance, and believe our longer-term view that EA will see rising profitability from continued growth of digital sales is intact,” the Oppenheimer report stated.


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