EA Worth $75/Share Now On Digital Monetization, Brean Says

Courtesy of Benzinga.

In a report published Wednesday, Brean Capital analyst Todd Mitchell maintained a Buy rating on Electronic Arts Inc. (NASDAQ: EA), while raising the price target from $66 to $75.

“EA had arguably the strongest showing at E3 of any third-party publisher, with Star Wars: Battlefront, a Mass Effect 4 reveal, and improvements in game play and graphics across the entire EA Sports portfolio and Need for Speed franchise,” analyst Todd Mitchell said.

While the company has been performing well, so has its stock. Following the E3, Electronic Arts’ stock has outperformed that of other publishers. “EA should continue to outperform, although much of this appears priced into the stock,” Mitchell commented.

In the report Brean Capital noted, “The company is also leading its peers on digital monetization on consoles and the cross-over into mobile, both of which are helping to create a more consistent earnings profile and expand margins. We continue to hold some doubts, specifically on the long-term growth of Ultimate Team and EA’s FPS rotation, but do not believe that these will materialize into negative catalysts anytime soon.”

Mitchell expects Electronic Arts’ guidance to “prove conservative.” The revenue and non-GAAP EPS estimates for FY16 have been raised from $4.44 billion to $4.50 billion and from $2.80 to $2.85, respectively, as compared to the company’s guidance for $4.4 billion and $2.75.

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