Skip to main content

Market Overview

'Escaping The Penalty Box': Wall Street Reacts To EA's 'Battlefield' Delay

'Escaping The Penalty Box': Wall Street Reacts To EA's 'Battlefield' Delay

Electronic Arts Inc. (NASDAQ: EA) announced a delay Thursday in the highly anticipated release of "Battlefield V" and lowered its guidance.

The Analysts

  • UBS analyst Eric Sheridan reiterated a Buy rating on Electronic Arts and lowered the price target from $176 to $166.
  • BMO Capital Markets analyst Gerrick Johnson maintained an Outperform rating and lowered the price target from $162 to $140.
  • Wedbush analyst Michael Pachter maintained an Outperform rating and a price target of $158.
  • Macquarie analyst Benjamin Schachter maintained an Outperform rating and lowered the price target from $158 to $138.

The Theses

UBS' Sheridan outlined both short-term and long-term projections for the video game maker in a Friday note. 

On a short-term basis, Sheridan emphasized the importance of EA “escaping the penalty box.”

After the downward guidance revision, "investors will logically raise issues with "BF V" performance in a crowded slate (and what it means for development of non-sports titles), mobile headwinds (titles and competition) and F/X, as there have been recent mixed messages," the analyst said. 

The short- and medium-term investor focus will be on concerns over the performance of sports titles such as "FIFA 19," he said. 

In the long run, the video game industry is moving toward a games-as-a-service business model, Sheridan said. 

This model supports sustainable revenue growth, continued margin expansion and  stable, predictable free cash flow generation, the analyst said. 

BMO's Johnson referenced a blog post by DICE General Manager Oskar Gabrielson that attributed the "Battlefield V" delay to tweaks in gameplay tempo, soldier visibility and the inclusion of battle royale mode.  

"Management would not confirm nor deny that it was taking down its overall expectations for 'Battlefield V,' since it never gave public guidance on the game's anticipated performance," Johnson said. "However, given what appears to be poor pre-orders, we think there was concern about the game's performance, especially given the competitive holiday release."

Wedbush's Pachter said EA was smart to delay the release due to the possibility of higher sales on the back of better performance.

“While ceding some sales to 'Call of Duty: Black Ops 4,' 'Battlefield V' review scores should benefit from roughly four extra weeks of development time. We estimate that [fiscal 2019] guidance now contemplates roughly 11 million units, down from 13 million units previously, with Q3 and Q4 sales of 8 million units and 3 million units, respectively,” the analyst said. 

The implied Q3 number appears "conservative," as "Star Wars: Battlefront II" sold more than 7 million units in its launch quarter despite a negative reaction from gamers and reviewers, Pachter said. 

Macquarie's Schachter said EA is seeking the right acquisition to grow its mobile business — a challenging goal. 

The "Battlefield" delay also threatens to create a track record of poor holiday sales, the analyst said. 

“If after the revised release date the game is still weak, this will be the second year in a row of poor sales from a big holiday title from EA and DICE, a marked turnaround from the development studio’s prior track record." 

Price Action

EA shares were down 2.38 percent at $113.18 at the time of publication Friday. 

Related Links:

How Video Game Developers Are Taking On 'Fortnite' — And Why KeyBanc Remains Bullish

Making Gains In Video Games: Analyst Gets Bullish On Activision, EA And Take Two

Photo courtesy of EA. 

Latest Ratings for EA

Feb 2021BMO CapitalMaintainsMarket Perform
Feb 2021Atlantic EquitiesDowngradesOverweightNeutral
Feb 2021Piper SandlerMaintainsNeutral

View More Analyst Ratings for EA
View the Latest Analyst Ratings


Related Articles (EA)

View Comments and Join the Discussion!

Posted-In: Battlefield Benjamin Schachter BMO Capital MarketsAnalyst Color Price Target Reiteration Top Stories Analyst Ratings Best of Benzinga

Latest Ratings

GIKColliers SecuritiesInitiates Coverage On14.0
SANWLake StreetInitiates Coverage On6.0
LILAMorgan StanleyDowngrades15.0
BEJP MorganUpgrades36.0
NEXACredit SuisseUpgrades11.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at