Electronic Arts Inc. (NASDAQ: EA) had been on the mend for some time and had been enjoying the video game console cycle upgrade going into November. Now its stock has pulled back, and its shareholders and those who gambled on its turnaround continuing are getting gunned down with a vengeance on Thursday due to glitches over its hit video game Battlefield 4.
It also appears that Dice’s projects have been put on hold for the company to work on fixing its technical glitches for Battlefield 4’s glitches. Sterne Agee also sent us a note on the matter maintaining its Buy rating and $29 price target, for now.
Sterne Agee’s analyst research report from Arvind Bhatia said, “EA shares are down as the company is having technical issues online which is affecting player experience for Battlefield 4. As we mentioned in our post Thanksgiving read on Monday, the sell through for Battlefield 4 so far is down more than we had expected. We had pointed out heavy discounting at GameStop (50% off). The server issues further exacerbate this and create risk to full year estimates.”
This is a situation where analysts will have to decide how much they ratchet down their sales and earnings estimates. It is almost certainly not an IF any longer.
We would point out elsewhere that a firm called Hilliard Lyons just upgraded the video game maker to Neutral from Underperform on Wednesday. Unfortunately, that was into serious weakness, although it was merely the removal of what Wall Street interprets a “sell” rating.
EA shares were down 6% at $21.00 mid-afternoon in active trading on Thursday. The 52-week trading range is $13.29 to $28.13, and the consensus analyst price target from Thomson Reuters is $27.63. EA’s market value is $6.5 billion and this was briefly a $60 and even $70 stock back in 2005.
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