Tuesday's Market Minute: Previewing Electronic Arts (EA) Earnings

Electronic Arts EA reports 1Q earnings after the bell today, with Zacks forecasting EPS of $0.29 and revenue of $1.25 billion. Last night, we got Activision Blizzard’s ATVI earnings, and although that company is limiting its report due to its upcoming deal close with Microsoft MSFT, it showed that sales dropped for a third straight quarter and bookings fell 14.6% year over year.

EA’s flagship sports games are distinct from Activision’s Call of Duty franchise or World of Warcraft. Activision has also recently been reckoning with harassment and discrimination suits. However, Activision’s revenue slide could also indicate simply that demand is drying up in the video game sector overall, between console manufacturing struggling to keep up with demand, the summer weather bringing people outside, and inflation. 

Electronic Arts became some part of the stay-at-home trade with COVID-19. Now that the world is inching back towards normal, is the stock overvalued? Several analysts have trimmed its price target in the last few weeks, but only by a few dollars—for example, Credit Suisse cutting to $159 from $162, both well above its current trading price around $130. Does EA have enough to offer to justify its price tag? Tune into TD Ameritrade Network for a breakdown of its quarterly report, and more.

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