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Electronic Arts (EA) Loss of NCAA Contract Not Material

July 18, 2013 8:28 AM EDT
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Price: $132.91 +0.79%

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Wedbush today maintained an Outperform rating on Electronic Arts (NASDAQ: EA) with a price target of $26.00. Yesterday EA shares declined on reports that the NCAA would not renew its sports contract. Commenting, analyst Michael Pachter said the news will not have a material impact on sales.

"We do not expect the expiration of the NCAA contract to have a material impact on sales of EA's college football games. We believe that EA has entered into two contracts for its college football content. One contract is with the NCAA and gives EA the right to use the letters "NCAA" in its college football games. The other contract is with the Collegiate Licensing Company (CLC), which represents a large number of the NCAA’s member schools, and allows EA to use the uniforms and logos of the members of different conferences and teams," said Pachter.

"In our view, the second contract is the basis for the realistic college football gaming experience that gamers currently enjoy, as popular schools and rosters are accessible in gameplay. We believe that the CLC contract has over one year remaining, and that the bulk of the royalty currently paid by EA goes to the CLC, not the NCAA," he added.

For an analyst ratings summary and ratings history on Electronic Arts (NASDAQ: EA) click here. For more ratings news on Electronic Arts click here.

Shares of Electronic Arts closed at $23.81 yesterday.


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