Electronic Arts (EA) PT Lowered to $165 at Credit Suisse on Weak EPS Guidance
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Credit Suisse analyst Stephen Ju lowered the price target on Electronic Arts (NASDAQ: EA) to $165.00 (from $167.00) after the company reported 4QFY21 revenue/EPS of $1490mm/$1.23 vs. expectations for $1396mm/$1.01. Management guided 1Q22 revenue/EPS to $1250mm/$0.55. Upside came from Apex Legends, which drove $600mm+ of bookings.
The analyst maintained an Outperform rating stating "Mgmt.’s initial FY22 outlook, which contemplates organic growth in the core business as well as the recent acquisitions, was ahead of our top-line estimates while Adj. EPS was lower given investments ahead of key launches, in addition to anticipating no cost synergies". "Our discounted cash flow-based target price of $165 (vs prior $167) uses an 11% weighted average cost of capital and 3% terminal growth assumptions. Lack of commercial traction for any of its upcoming releases is a risk to our estimates."
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