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Investing.com - Roth/MKM has downgraded Electronic Arts (NASDAQ:EA) from Buy to Neutral while raising its price target to $210.00 from $185.00 following the company’s $55 billion take-private deal announcement. The stock currently trades at $201.55, near its 52-week high of $203.75, after posting an impressive 19.79% gain in the past week.
The research firm cited limited upside potential of only 4% remaining based on the $210 per share cash buyout offer as the primary reason for the rating change. Despite a 45-day window shop provision, Roth/MKM does not anticipate a bidding war to emerge for the video game publisher. According to InvestingPro data, EA maintains a GOOD financial health score, with strong cash flows and moderate debt levels, making it an attractive acquisition target.
The firm also expressed confidence that the transaction would not face significant regulatory hurdles, suggesting a smooth path to completion for the deal that values EA at approximately $55 billion.
The $210 per share offer represents price-to-earnings multiples of roughly 25x and 23x based on consensus estimates for fiscal years 2026 and 2027, respectively. This marks a premium compared to EA’s unaffected valuation on September 25, which stood at 20.3x and 18.4x for the same periods. InvestingPro analysis reveals multiple valuation metrics and insights, with 16+ additional ProTips available to subscribers, helping investors make informed decisions about such significant corporate events.
Roth/MKM characterized the offer as a "fair takeout valuation" for Electronic Arts, while noting potential upside to earnings projections based on expectations that Battlefield 6 and subsequent live services offerings could exceed current forecasts.
In other recent news, Electronic Arts announced an agreement to be acquired by a consortium of investors, including the Saudi Public Investment Fund (PIF), Silver Lake, and Affinity Partners, for $210 per share in cash. This acquisition values the company at approximately $36 billion in equity. Following this announcement, UBS and BMO Capital both raised their price targets for Electronic Arts to $210, while maintaining Neutral and Market Perform ratings, respectively. Jefferies also increased its price target to $210, but downgraded the stock from Buy to Hold due to the buyout news. Meanwhile, HSBC downgraded Electronic Arts from Buy to Hold, citing limited upside potential with the stock trading near its price target of $191. These recent developments reflect significant changes in the company’s ownership structure and analyst perspectives.
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