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Dec. 6, 2021, 2:11 p.m. EST

Electronic Arts upgraded to buy on belief most bad news is already priced in

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By Wallace Witkowski

Electronic Arts Inc. ticked higher Monday after one analyst upgraded the videogame publisher on the basis that risks were already priced in to the stock as the industry navigates a turbulent quarter.

EA /zigman2/quotes/206954087/composite EA +4.42% shares, which were up as much as 2% Monday, have declined 14% over the past three months. In comparison, Activision Blizzard Inc. stock /zigman2/quotes/200717283/composite ATVI +27.17% has suffered a 29% drop over that period and Take-Two Interactive Software Inc.’s stock /zigman2/quotes/204008930/composite TTWO +2.00% has gained 1%.

Citi Research analyst Jason Bazinet upgraded EA to a buy from a neutral rating but scaled back his price target to $150 from $160 in that “most of the downside risk may be priced into the equity at current levels.”

In late November, EA’s “Battlefield 2042” release — which had already been delayed by a month but not as bad as a rumored 2022 release — debuted as one of the worst reviewed games on online games site Steam in what has been a rough quarter for the sector as a whole.

“We attribute most of the recent declines in the equity to concerns surrounding the company’s release of Battlefield 2042, as the title has been met with (mostly) negative reviews since the mid-November release,” Bazinet said.

“However, we believe concerns surrounding the company’s dispute with FIFA over its license renewal, potential IDFA headwinds, and concerns over a tougher Chinese regulatory environment may also be weighing on the equity,” the Citi Research analyst added.

Meanwhile, Benchmark analyst Mike Hickey notes that EA developer Dice has sent out satisfaction surveys to gamers trying “to find out what needs improving” with Battlefield 2042.

That follows news on last week that Vince Zampella, co-founder of Apex Legends and Titanfall developer Respawn Entertainment, would oversee the Battlefield franchise going forward, and that Dice head Oskar Gabrielson was leaving the studio.

Of the 30 analysts who cover EA, 22 have buy ratings and eight have hold ratings, along with an average price target of $174.20, according to FactSet Research.

/zigman2/quotes/206954087/composite
US : U.S.: Nasdaq
$ 136.21
+5.77 +4.42%
Volume: 6.63M
Jan. 18, 2022 2:45p
P/E Ratio
50.11
Dividend Yield
0.50%
Market Cap
$36.89 billion
Rev. per Employee
$588,636
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/zigman2/quotes/200717283/composite
US : U.S.: Nasdaq
$ 83.16
+17.77 +27.17%
Volume: 99.71M
Jan. 18, 2022 2:45p
P/E Ratio
24.54
Dividend Yield
0.57%
Market Cap
$50.93 billion
Rev. per Employee
$954,105
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/zigman2/quotes/204008930/composite
US : U.S.: Nasdaq
$ 155.64
+3.06 +2.00%
Volume: 4.23M
Jan. 18, 2022 2:45p
P/E Ratio
32.08
Dividend Yield
N/A
Market Cap
$17.61 billion
Rev. per Employee
$519,148
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