EA (EA) Price Target Lifted to $58 at Sterne Agee Post Q3

Sterne Agee analyst Arvind Bhatia reiterated a Buy rating and boosted his price target on Electronic Arts (NASDAQ: EA) to $58.00 (from $54.00) following Q3 results, saying 30% operating margins seems achievable over the next three years.

commented, "Results significantly exceeded expectations, driven by strength in digital, focus on cost control and continued operating leverage. One industry theme that emerged over the holiday season was the stability in old-gen software sales, which have been a significant drag on growth. Going forward, EA’s operating margins, already up more than 1400 bps in the last two years (~24% currently from ~10% two years ago), still have room for expansion and we see 30% OMs as achievable over the next 3 years. This should happen as the business continues to shift to digital (benefit to gross margin), R&D costs remain flattish and, the company realizes even greater marketing efficiencies as games become live services in which customers are always engaged."

The firm is adjusted FY15 revenue / EPS estimate to $4.25B / $2.35 from $4.175B / $2.05 and our FY16 revenue / EPS estimate to $4.47B / $2.65 from $4.384B / $2.35.

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 $48.41 yesterday.

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