Electronic Arts stock price target raised to $210 from $167 at UBS

Investing.com - UBS raised its price target on Electronic Arts (NASDAQ:EA) to $210.00 from $167.00 on Tuesday, while maintaining a Neutral rating on the video game publisher's stock. The stock, currently trading at $201.97, has shown remarkable momentum with a 16% gain in the past week and is trading near its 52-week high of $203.75.

The price target adjustment follows Electronic Arts' announcement of an agreement to be acquired by PIF, Silver Lake, and Affinity Partners for $55 billion, or $210 per share in cash. The company, currently valued at $50.34 billion, maintains a "GOOD" Financial Health Score according to InvestingPro analysis, with 16+ additional key insights available to subscribers.

According to UBS, the acquisition price represents 6.8 times estimated forward bookings and 18.1 times EBITDA, compared to Microsoft's $69 billion purchase of Activision Blizzard which was valued at 7.3 times forward bookings and 17.5 times EBITDA when announced in 2022.

The deal is expected to close in the first quarter of fiscal year 2027, subject to shareholder and regulatory approval, with Electronic Arts facing restrictions on soliciting alternative acquisition proposals.

UBS indicated it assumes the deal will close and has aligned its price target with the $210 per share offer price, noting this valuation compares to Electronic Arts' two-year trading range of 11-15 times EBITDA.

In other recent news, Electronic Arts has announced a significant development involving its acquisition by a consortium of investors, including the Saudi Public Investment Fund, Silver Lake, and Affinity Partners. This agreement values the company at approximately $36 billion in equity, with shareholders receiving $210 per share in cash. Following this announcement, BMO Capital raised its price target for Electronic Arts to $210 from $166, while maintaining a Market Perform rating.

Jefferies also adjusted its outlook, downgrading the stock from Buy to Hold, but increased its price target to $210 from $200 due to the acquisition news. Similarly, HSBC downgraded its rating from Buy to Hold, citing limited upside potential with a price target of $191. In contrast, Benchmark maintained a Buy rating and raised its price target significantly to $250, reflecting optimism about the potential value of the buyout.

These developments underscore the significant interest and varying perspectives among analysts regarding Electronic Arts' future prospects. The acquisition deal represents a substantial premium over the current market valuation, suggesting confidence in the company's strategic direction.

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