UBS Remains Bullish on Electronic Arts (EA) Following 4Q Results
UBS maintained a Buy rating and $82.00 price target on Electronic Arts (NASDAQ: EA) following the company's solid 4Q earnings results. 1Q17 estimates for revenues were raised to $649mm (from $720mm). Adjusted EBITDA of $37mm was changed from $116mm previously. EPS is estimated to be $(0.02) (from $0.18).
Analyst Eric Sheridan commented, "EA delivered a solid quarter of execution on both revenue growth & margins and provided a forward outlook that called for continued high-single digit revenue growth and further operating margin leverage (100bps+) over the next 12 months. Moreover, the strength of EA's console revenues (including full-game downloads), mobile growth & extra content suggests the company continues to benefit from both cyclical (next-gen consoles) & secular (mobile & digital) trends in gaming. At EA's analyst day on May 17th (which we point to as a likely positive catalyst), we expect management to articulate long term initiatives around content creation, the financial implications of the shifts to digital/mobile & the potential for a long-term capital return program. The issuance of ~$1b of long-term debt & the subsequent repurchase of ~10mm shares in FQ4 supports our view that EA could drive outsized returns to shareholders over time."
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Shares of Electronic Arts closed at $64.54 yesterday.