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Electronic Arts Is Trading at a Discount to Analysts’ Estimates

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Aug. 18 2020, Updated 5:16 a.m. ET

Stock returns

Electronic Arts (EA) stock had a stellar run over the last few years with a few corrections along the way. The stock rose ~19% in 2016 and 38% in 2017. Last year, the stock fell close to 26%. So far, Electronic Arts stock has risen almost 20% in 2019.

Electronic Arts shares have generated absolute returns of 48% in the last three years and close to 234% in the last five years. Activision Blizzard (ATVI), Take-Two Interactive (TTWO), and Zynga (ZNGA) stocks have generated returns of 1%, -9%, and 43%, respectively, in 2019.

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Analysts’ recommendations

Among the 27 analysts tracking Electronic Arts, 22 recommended a “buy,” while five recommended a “hold.” None of the analysts recommended a “sell.” Analysts’ 12-month average target price for Electronic Arts is $102.48, while the median estimate is $103. Electronic Arts is trading at a premium of 9% to analysts’ median estimate.

What do the technical indicators say?

On April 23, Electronic Arts closed the trading day at $94.63. Based on that price, the stock was trading as follows:

  • 3% above its 100-day moving average of $92.11
  • 4.5% below its 50-day moving average of $98.96
  • 4% below its 20-day moving average of $98.50

MACD and RSI

Electronic Arts’ 14-day MACD (moving average convergence divergence) is -3.69. A stock’s MACD marks the difference between its short-term and long-term moving averages. The company’s negative MACD score indicates a downward trading trend.

Electronic Arts has a 14-day RSI (relative strength index) score of 43.7, which shows that its stock is trading close to the oversold territory. An RSI score above 70 indicates that a stock is overbought, while an RSI score below 30 indicates that a stock is oversold.

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