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J.P. Morgan Initiates Coverage on Electronic Arts

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May. 7 2018, Updated 8:03 a.m. ET

Price target of $150 for EA

Recently, investment bank J.P. Morgan (JPM) initiated coverage of Electronic Arts (EA). J.P. Morgan has an “overweight” rating on the stock with a 12-month price target of $150, which indicates that EA is trading at a discount of 25% to JPM’s estimates.

EA and Activision Blizzard (ATVI) stock fell in March this year after Epic Games announced that Fortnite has attracted over 45 million players to date since its launch in September last year.

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However, J.P. Morgan analyst Alexia Quadrani is not overly concerned and in a client note stated, “We believe investors are focused on the financial impact of PUBG/Fortnite on major publishers following the rapid rise of battle royale over the past year. We expect strong competition in the 2018 release slate with additional competition from the ramping Fortnite and battle royale style of game play.”

Will EA release a battle royale game mode?

Fortnite is a free-to-play “battle royale” game where several players compete with each other in a battle until only one player survives. Fortnite is one of the most popular games streamed on Twitch (AMZN).

Quadrani estimated EA will outperform peers driven by its robust gaming portfolio and popular franchises. Further, the analyst also expects EA to release “battle royale” gaming modes for Battlefield and Anthem games in fiscal 2019.

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