UPDATE: UBS Upgrades Electronic Arts (EA) to Buy

UBS upgraded Electronic Arts (NASDAQ: EA) from Neutral to Buy and raised their price target to $80 from ($65), saying they are increasingly positive on the business mix and runway ahead.

Analyst Eric Sheridan commented, "Over the past several quarters, EA's management has delivered a series of upside surprises on both top- and bottom-lines driven by strong title performance, higher gross margins from digital sales (led by growth in extra content, free-to-play and mobile gaming), and cost efficiencies. Despite the rise in EA shares during this time, we see continued runway for outperformance given: a) expected FY16 title slate strength (Star Wars: Battlefront in particular); b) continued mix shift towards digital sales; c) mobile gaming traction (now over 165mm mobile MAUs, contributing over 12% of trailing 12- month non-GAAP revenue); d) continued focus on cost discipline; & e) possibility for a recap using improved FCF to support greater debt to repurchase shares. As a result, we raise our operating estimates & PT for EA and upgrade to Buy."

The firm's new FY16 ests are non-GAAP revs of $4.63b (from $4.48b), Adj. EBITDA of $1.50b (from $1.43b), and Adj. EPS of $3.01 (from $2.84).

For an analyst ratings summary and ratings history on Electronic Arts click here. For more ratings news on Electronic Arts click here.

Shares of Electronic Arts closed at $68.01 yesterday.

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