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On Wednesday, BofA Securities analyst Omar Dessouky updated the investment firm’s outlook on Electronic Arts (NASDAQ:EA), raising the video game company’s price target from $130.00 to $132.00. Dessouky maintained a Neutral rating on the stock, even as InvestingPro data shows the stock trading near its 52-week low of $115.21, with a year-to-date decline of 17%.
The adjustment follows Electronic Arts’ pre-announcement on January 22, which raised concerns about a potential structural decline in its football franchise (FC). Dessouky’s evaluation of the company’s subsequent conference call indicated that the FC’s performance issues, evident since November through early January, were likely due to the gameplay tuning that didn’t resonate with hardcore players, possibly affecting new player acquisition as well. Despite these challenges, InvestingPro data reveals EA maintains strong financial health with an impressive gross profit margin of 78.6% and sufficient cash flows to cover its obligations.
Dessouky noted that while issues with game design and execution can be more readily addressed compared to structural concerns such as market saturation or monetization challenges, Electronic Arts faces hurdles in attracting new players. The analyst pointed out that fewer FC 24 players transitioned to the latest FC 25 iteration, and the combined player base for the franchise remained flat year-over-year.
The report by BofA Securities suggests that the onus is on Electronic Arts to prove that its football franchise can continue to grow at a mid-single-digit rate over the long term, despite these challenges. The updated price target reflects BofA’s assessment of the company’s potential to address and overcome the recent hurdles identified. According to InvestingPro, which offers comprehensive analysis through its Pro Research Reports covering 1,400+ stocks, EA currently appears slightly undervalued, with 12 additional ProTips available to subscribers providing deeper insights into the company’s financial position and market performance.
In other recent news, Electronic Arts (EA) has been the subject of several analyst reports and business developments. Oppenheimer maintained an Outperform rating for EA, emphasizing investor anticipation for the company’s earnings report and potential improvements to the FIFA franchise. However, concerns about the release of Battlefield in FY26 persist. On the other hand, Citi reduced its price target for EA to $139 from $163, reflecting a recalibration due to EA’s revised third-quarter fiscal year 2025 bookings guidance.
Furthermore, EA announced its intention to acquire TRACAB Technologies, a move expected to enhance the realism and immersion of their sports simulations. Despite recent challenges, Benchmark maintained a Buy rating for EA, citing confidence in the company’s long-term strategy. These are the latest developments surrounding Electronic Arts, providing investors with updated insights into the company’s performance and strategies.
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