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On Wednesday, Goldman Sachs analyst Eric Sheridan revised the 12-month price target for Electronic Arts (NASDAQ:EA) shares, reducing it to $135 from the previous target of $140, while maintaining a Neutral rating on the stock. With analyst targets ranging from $115 to $183 and the stock currently trading at $121.25, InvestingPro analysis suggests EA is slightly undervalued. Sheridan’s update followed Electronic Arts’ third fiscal quarter 2025 report, which confirmed and elaborated on several key points regarding the company’s performance and outlook.
Electronic Arts’ reported earnings highlighted a mid-single digit year-over-year decline in net bookings for EA Global Football in the third quarter, reflecting broader revenue challenges as shown by the company’s -2.42% revenue growth over the last twelve months. This decrease was partly attributed to a double-digit drop in unit sales in December and early January. Additionally, weaker engagement levels were also a contributing factor to the decline. Despite these challenges, InvestingPro data shows EA maintains strong financial health with a robust 78.57% gross profit margin and more cash than debt on its balance sheet.
Despite this downturn, there was a silver lining as EA Global Football experienced strong momentum following the launch of the Team of the Year event and a significant gameplay update. This could potentially lead to better-than-expected performance in the fourth quarter, contrasting with management’s current expectations of a low double-digit year-over-year decline for the franchise.
Looking ahead, Electronic Arts expressed optimism about returning to growth in the fiscal year 2026, with or without the release of Battlefield, which is tentatively scheduled for that fiscal year. The management team indicated they would take into account the timing and release slate to maximize the potential of the next Battlefield installment.
Furthermore, the company emphasized its commitment to shareholder returns, with the execution of an accelerated $1 billion share repurchase program. The company’s strong financial position is evidenced by its healthy cash flows and current ratio of 1.43. In light of the recent earnings report and management’s commentary, Sheridan adjusted operating estimates for Electronic Arts, reaffirmed the Neutral rating, and set the new price target. For deeper insights into EA’s valuation and financial health metrics, including 12 additional ProTips and comprehensive analysis, visit InvestingPro.
In other recent news, Electronic Arts (EA) is set to acquire TRACAB Technologies, aiming to enhance the realism of their sports simulations. This development comes alongside analyst updates on EA’s stock. BofA Securities raised EA’s price target to $132, citing the company’s potential to overcome challenges in its football franchise. Oppenheimer maintained an Outperform rating and a $140 target, highlighting anticipation for EA’s earnings report and concerns over the company’s fiscal year 2026 outlook. Conversely, Citi cut EA’s stock price target to $139 from $163 following EA’s lowered third-quarter fiscal year 2025 bookings guidance. These recent developments in the gaming industry highlight the dynamic nature of the sector.
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