Electronic Arts (EA) Gains After Topping Q4 Estimates, Analyst Confident There is More to Come

May 12, 2021 9:06 AM EDT
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Price: $144.80 -2.52%

Rating Summary:
    28 Buy, 14 Hold, 0 Sell

Rating Trend: Up Up

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    Up: 10 | Down: 9 | New: 61
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Shares of Electronic Arts (NASDAQ: EA) are up 1.5% in pre-open trading Wednesday after the company reported higher-than-expected fourth-quarter results.

Earnings per share (EPS) came in at $1.23 per share to top the $1.05 expected from the market analysts. Net booking came in at $1.49 billion, again higher than the $1.39 billion expected from the market.

Andrew Wilson, CEO of Electronic Arts, said: “With tremendous engagement across our portfolio, we delivered a record year for Electronic Arts. We’re now accelerating in FY22, powered by expansion of our blockbuster franchises to more platforms and geographies, a deep pipeline of new content, and recent acquisitions that will be catalysts for further growth.”

For its Q1 that ends June 30, EA is projecting to make profits of $0.55 per share on an adjusted basis on net bookings of $1.25 billion. This compares to the consensus of $0.62 per share in earnings on revenue of $1.16 billion.

For the full-year 2022 report, EA is projecting to earn $6.15 per share on sales of $7.3 billion. Analysts were calling for EPS $6.16 per share on revenue of $6.6 billion.

Jefferies analyst Andrew Uerkwitz praised a “strong end” to the fiscal year that EA delivered. He rates the stock with a “Buy” rating and a price target of $165.00 per share.

“We continue to be optimistic EA can unlock its underappreciated assets and believe we have started to see that put in motion. The initial FY22 guide of $7.3B bookings and $6.15 EPS is a good start, and likely conservative, with few synergies or much for Apex mobile in 2H. Starting with the Battlefield reveal next month and building into the holiday we see EA weaving a compelling story,” the analyst wrote in a note.

EA’s Q4 results and guidance weren’t enough to convince BofA analyst Ryan Gee to change the “Neutral” rating on the stock. However, he did lift the price target to $156.00 per share from $153.00 per share.

“EA’s core franchises are trending well and we like seeing a roadmap to expand each with new platforms and business models. We also see possible synergies from Glu/Codemasters longer-term enhancing EA’s own brand such as Mobile sports. However, we see greater risk of deceleration for Sports from here and execution has been an area of (albeit decreasing) concern for us regarding EA. As such, we await more details on “what, when, and how big?” before getting more constructive on the stock,” Gee writes in a memo.

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