Jun. 24 at 7:13 AM
Roth/MKM Upgrades
$EA to Buy from Neutral, Raises PT to
$185 from
$175; cites inflection point and Battlefield launch as key catalyst
Analyst comments: "We see EA at an important inflection point setting it up well for an elevated, multi-year growth trajectory. Fueling this story is ongoing low-single to mid-single digit growth from key sports titles, which will be complemented over the next several years by a new Battlefield game, the introduction of new variations of The Sims, and a handful of other games including Skate and Star Wars: Zero Company.
However, after three years in which bookings declined at a 1% CAGR and the EPS recovery was driven entirely by growth in interest income and share buybacks, investors are taking a wait-and-see approach, as evidenced by EA shares having largely moved in line with the S&P 500 over the last year.
The most significant near-term key to share outperformance, in our view, is a successful launch (we think in the fall) for Battlefield, a franchise which has underdelivered with its last two games (Battlefield V in FY19, Battlefield 2042 in FY22). Our view is changes in Battlefield development over the last 3–4 years put the game in an excellent position to succeed."
Analyst: Eric Handler
