Q3 Preview: Analysts Bullish-to-Neutral on EA (EA) Ahead of Results
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Price: $209.70 --0%
Rating Summary:
15 Buy, 32 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
15 Buy, 32 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Shares of Electronic Arts (NYSE: EA) are trading down nearly 0.4 percent Wednesday ahead of the release of its third-quarter results after the closing bell.
The Wall Street quarterly consensus for Electronic Arts is $0.93 per share in earnings on $1.61 billion in sales. During the third quarter of last year, the company reported earnings of $0.59 per share on $1.41 billion in total sales. The company’s guidance calls for revenue of $1.55 – 1.65 billion and earnings of $0.85 to $0.95 per share.
For the fiscal year 2012, analysts on the Street are currently estimating $0.89 per share in earnings on $4.17 billion in total sales. The company’s guidance calls for revenue of $4.05 – 4.20 billion and earnings of $0.75 to $0.90 per share.
The third quarter conference call is scheduled for 5:00 pm ET. Dial-In: 773-799-3213, Passcode: EA; webcast: ir.ea.com
According to data from Bloomberg, shares of Electronic Arts have 14 Buy ratings, nine Hold ratings and three Sell ratings. The average price target on shares of EA is $24.50 with a range from $14 to $29.
Analyst Comments:
Wedbush is slightly bullish on the quarter and forecasts earnings of $0.97 per share on $1.68 billion in sale. A Wedbush analyst said, “After failing to do so in Q1 and Q2, we believe management will fully pass through any Q3 earnings beat, barring the delay of any high-profile Q4 releases.”
Wedbush reiterated an Outperform rating and $29 price target.
Back on January 17th, Goldman Sachs lowered its price target on the company from $25 to $22 as it lowered its outlook for fiscal 2013 and 2014. The firm remains Neutral on the company as Star Wars MMO sales are reaching expectations. Goldman believes the company will be able to sustain a membership growth of 1.5 million subscribers into fiscal 2013. Earnings could be hurt by as much as $0.09 per share if the game doesn’t gain the traction originally expected.
An analyst at Goldman Sachs said, “We think EA will maintain or grow its total operating expenses to reinvest in social and mobile efforts rather than scale back opex post the Star Wars MMO launch. We see its social games as breakeven for now and its mobile margin is dragged by a shift away from high-margin feature phone revenue. This leads to a total digital margin of 25%. With our estimate of over $1.5bn in digital revenue in FY2013, we see about 200bp of margin expansion, below the Street’s 300-plus basis points.”
Brean Murray Carret & Co. expects to see strong operating results for the quarter, but remains skeptic over the long-term. The firm estimates earnings of $0.95 per share on $1.6 billion in total revenues.
“We think most of EA’s operating leverage, and EPS growth, in fiscal 2012 was the result of improved profitability of its core packaged good business, and getting through the launch of SWTOR. Next year, EA will face a though comp in its console business, while the contribution from social remains unclear, leaving upside heavily dependent on Star Wars, when we think the outlook may be a little aggressive,” stated an analyst at Brean Murray Carret & Co.
Brean Murray Carret & Co reiterated a Buy rating and $22 price target.
The Wall Street quarterly consensus for Electronic Arts is $0.93 per share in earnings on $1.61 billion in sales. During the third quarter of last year, the company reported earnings of $0.59 per share on $1.41 billion in total sales. The company’s guidance calls for revenue of $1.55 – 1.65 billion and earnings of $0.85 to $0.95 per share.
For the fiscal year 2012, analysts on the Street are currently estimating $0.89 per share in earnings on $4.17 billion in total sales. The company’s guidance calls for revenue of $4.05 – 4.20 billion and earnings of $0.75 to $0.90 per share.
The third quarter conference call is scheduled for 5:00 pm ET. Dial-In: 773-799-3213, Passcode: EA; webcast: ir.ea.com
According to data from Bloomberg, shares of Electronic Arts have 14 Buy ratings, nine Hold ratings and three Sell ratings. The average price target on shares of EA is $24.50 with a range from $14 to $29.
Analyst Comments:
Wedbush is slightly bullish on the quarter and forecasts earnings of $0.97 per share on $1.68 billion in sale. A Wedbush analyst said, “After failing to do so in Q1 and Q2, we believe management will fully pass through any Q3 earnings beat, barring the delay of any high-profile Q4 releases.”
Wedbush reiterated an Outperform rating and $29 price target.
Back on January 17th, Goldman Sachs lowered its price target on the company from $25 to $22 as it lowered its outlook for fiscal 2013 and 2014. The firm remains Neutral on the company as Star Wars MMO sales are reaching expectations. Goldman believes the company will be able to sustain a membership growth of 1.5 million subscribers into fiscal 2013. Earnings could be hurt by as much as $0.09 per share if the game doesn’t gain the traction originally expected.
An analyst at Goldman Sachs said, “We think EA will maintain or grow its total operating expenses to reinvest in social and mobile efforts rather than scale back opex post the Star Wars MMO launch. We see its social games as breakeven for now and its mobile margin is dragged by a shift away from high-margin feature phone revenue. This leads to a total digital margin of 25%. With our estimate of over $1.5bn in digital revenue in FY2013, we see about 200bp of margin expansion, below the Street’s 300-plus basis points.”
Brean Murray Carret & Co. expects to see strong operating results for the quarter, but remains skeptic over the long-term. The firm estimates earnings of $0.95 per share on $1.6 billion in total revenues.
“We think most of EA’s operating leverage, and EPS growth, in fiscal 2012 was the result of improved profitability of its core packaged good business, and getting through the launch of SWTOR. Next year, EA will face a though comp in its console business, while the contribution from social remains unclear, leaving upside heavily dependent on Star Wars, when we think the outlook may be a little aggressive,” stated an analyst at Brean Murray Carret & Co.
Brean Murray Carret & Co reiterated a Buy rating and $22 price target.
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