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How High Analysts Are Driving Up Their Targets on Electronic Arts
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Electronic Arts Inc. (NASDAQ: EA) closed up 0.3% at $96.01 ahead of earnings, but its shares screamed even higher on Wednesday after the earnings report. After the solid earnings report has been covered in-depth, 24/7 Wall St. wanted to see how analysts were looking at Electronic Arts after earnings.
There were some analysts that maintained Neutral and Hold ratings, but those were generally due to performance previously taking shares above their price targets.
EA was reiterated as Buy at Jefferies, and the price target was raised to $123 from $110. The report noted digital spending in Battlefield and FIFA driving a big earnings beat. The firm telegraphed that the big beat even overcame weakness of its Mass Effect, and showed that the live services are boosting profits by driving meaningfully higher amounts of in-game spending.
Wedbush reiterated its Outperform rating and raised its price target to $116 from $95. The firm expects significant growth for the foreseeable future being driven by EA’s cost discipline, digital sales growth and evergreen franchises including Battlefield, the Star Wars games and several sports titles.
Merrill Lynch reiterated its Neutral rating, but the firm raised its price objective to $109 and noted that its guidance looks conservative. That report focused on estimates being beat on strong digital contribution by Ultimate team and Battlefield 1, and the price target being based on a higher 23 times fiscal year 2019 earnings multiple as the rest of Wall Street is likely to anticipate earnings upside.
Credit Suisse reiterated its Outperform rating and raised its target to $114 from $109 in that call. Its report noted three secular factors diving EA shares up from here:
1) further positive mix shift to digital,
2) consumer adoption of microtransactions driving incremental monetization,
3) the expansion of EA’s addressable market to target the global online user base.
The research team at UBS raised its price target up to $112 from $96.
Shares of Electronic Arts were initially indicated up 8.2% at $103.95 in premarket trading on Wednesday. After almost an hour and a half of trading, EA shares were up a sharper 12.8% at $108.30 — and shares hit a new all-time high of $108.88 earlier in the morning.
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