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Electronic Arts: Analysts’ Views in April

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Electronic Arts

For Electronic Arts (EA), among the analysts polled by Thomson Reuters on April 8, ten analysts recommended a “strong buy,” 13 analysts recommended a “buy,” and ten analysts recommended a “hold” or some equivalent. Electronic Arts has risen 24.1% YTD (year-to-date) and outperformed its peers. Activision Blizzard (ATVI) has risen 2.9%, while Take-Two Interactive Software (TTWO) is trading with a YTD loss of 8.4%.

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The positive response received by Electronic Arts’ free-to-play game Apex Legends has been the key driver behind the stock’s outperformance this year. Electronic Arts’ mean consensus target price of $102.48 represents a potential upside of 4.6%.

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Recent developments

In March, Apple (AAPL) announced its foray into the gaming industry. Gaming stocks were broadly lower after the announcement. The Federal Trade Commission has announced a workshop on August 7 “to examine consumer protection issues related to video game ‘loot boxes’—in-game rewards players can buy while playing a video game.” Authorities in China have also been concerned about the impact of video games. We saw a temporary ban on new games last year, which hurt companies like Tencent (TCEHY).

Earnings

Electronic Arts is expected to post revenues of $1.18 billion in the fourth quarter of fiscal 2019. The company reported revenues of $1.60 billion in the sequential quarter and $1.25 billion in the same quarter in fiscal 2018. Electronic Arts’ net income is expected to fall to $294 million in the fourth quarter of fiscal 2019 from $592 million in the sequential quarter.

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