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On Monday, BofA Securities analyst Omar Dessouky adjusted the price target for Electronic Arts (NASDAQ:EA) shares, increasing it to $150 from the previous $132 while maintaining a Neutral rating on the stock. According to InvestingPro data, analyst targets for EA currently range from $126 to $179, with the stock trading near $146. Dessouky’s assessment is based on the strength of EA Sports, which is estimated to contribute over 80% of Electronic Arts’ consolidated earnings per share (EPS).
The analyst’s commentary highlighted the resilience of EA Sports in the face of potential consumer spending slowdowns, noting that its titles, which include FIFA, Madden/CFB, and F1, are leaders in their respective sports categories and command significant leisure time from core gamers. This strong position is expected to help the segment maintain its performance even during economic downturns. InvestingPro data supports this view, showing EA maintains robust financial health with a gross profit margin of 79% and strong cash flows that sufficiently cover interest payments.
However, Dessouky also pointed out challenges that new titles might face if launched during a recession, as they would compete for gamers’ limited funds with established incumbents. Additionally, he expressed concerns about the growth prospects for EA’s largest game, FIFA, which is believed to drive more than 60% of the company’s EPS. The analyst suggested that FIFA’s player base seems increasingly saturated, which could pose questions about the long-term growth trajectory of the company. Recent financial data from InvestingPro shows revenue declined 4% in the last twelve months, though the company maintains strong profitability with over $1.8 billion in EBITDA.
The reiteration of the Neutral rating by BofA Securities reflects a view of balanced risks for Electronic Arts in the year 2025. This perspective takes into account the company’s strong position in the sports gaming category, against the backdrop of potential economic challenges and market saturation for its flagship title.
Investors and market watchers will be keeping an eye on Electronic Arts’ performance as it navigates the evolving gaming landscape and responds to the dynamics of consumer spending and competition within the industry.
In other recent news, Electronic Arts has seen a series of analyst updates and financial forecasts. Benchmark analyst Mike Hickey raised the price target for Electronic Arts to $160, maintaining a Buy rating. This adjustment is based on the potential delay of Grand Theft Auto VI, which could provide Electronic Arts with an advantageous release window for its Battlefield series. Meanwhile, Citi has reiterated a Neutral rating with a $139 price target, citing expectations for future releases of FC and Battlefield to drive bookings growth in fiscal year 2026. However, the company has revised its guidance downward for fiscal year 2025 due to less successful launches and a slowdown in EA FC’s performance.
DA Davidson also maintains a Neutral rating with a $140 price target, highlighting increased player engagement for "FIFA 25" but noting a decline in "Apex Legends" market share. The firm emphasizes the importance of maintaining player engagement in a competitive industry. DA Davidson’s analysis acknowledges the challenges Electronic Arts faces with upcoming projects while recognizing its strong portfolio of gaming franchises. On a different note, TD Cowen lowered its price target to $160 while maintaining a Buy rating after Electronic Arts met Q3 expectations but revised its FY25 bookings and earnings forecasts downward. Despite these adjustments, TD Cowen sees potential upside if recent Free Cash trends continue.
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