Electronic Arts Investors Need To Know These Two Words

• Electronic Arts Inc. EA shares have appreciated 60.53 percent year to date, reaching a high of $76.77 on October 28.
• Macquarie’s Ben Schachter has maintained an Outperform rating on the company, while raising the price target from $82 to $83.
• Schachter believes that the market is now focused on the November 17 launch of Start Wars Battlefront, while expecting upside to management expectations.

Analyst Ben Schachter believes that although management has raised its Star Wars guidance from 9-10 million to 13 million for the year, there could be further upside to these expectations, mostly driven by digital content and continued sales through 2016.

“While some investors may “sell the news” around the Star Wars launch, we believe any weakness would present an opportunity,” Schachter stated.

On the other hand, Schachter also believes that Electronic Arts’ story continued to be strong, with the company continuing to execute on its core sports titles, while margins have continued to expand.

The company reported its F2Q revenues and non-GAAP EPS above the estimates, with the EPS expected to grow 10-15 percent over the next few years. Schachter also expressed optimism regarding the company’s robust cost controls and the remaining $800 million share buyback.

“Beyond Star Wars, we think that FY’17 will provide decent growth based on our expectations for new titles from key franchises such as Titanfall, Battlefield, Star Wars, Mass Effect, and others,” Schachter added.