Electronic Arts (EA) PT Lowered to $112 at MKM Partners

MKM Partners analyst Eric Handler lowered the price target on Electronic Arts (NASDAQ: EA) to $112.00 (from $135.00) while maintaining a Buy rating.

Handler commented, "We continue to view EA favorably but the pendulum needs to swing its way more to regain positive momentum. We are reducing our 3QFY19 estimates to reflect concerns about a weaker than anticipated launch for Battlefield V, although our EPS revision (still above guidance) is less steep than our revenue cut due to our view for operating expense savings. In our view, EA continues to benefit from the industry's secular tailwinds but needs to: (1) demonstrate much better execution and consistency with console titles beyond sports; and (2) re-accelerate the growth in its Live Services business. To that end, the upcoming open beta/release of new IP, Anthem, offers an important measuring stick as well as a key starting point for FY20. Based on a reduced FY20 EPS outlook and recent multiple contraction for the group and the broader market, we are lowering our price target to $112 from $135 which reflects a 20x P/E multiple (down from 26x) plus net cash."

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