Technology stock to watch: Electronic Arts Inc. (NASDAQ: EA)
Electronic Arts Inc.(NASDAQ: EA) has reported the adjusted earnings per share of $2.58 in the third quarter 2016 ended 31st December, beating the analysts’ estimates for the adjusted earnings per share of $2.30. EA’s loss in the third quarter has narrowed to $1 million from $45 million a year earlier. Electronic Arts had reported the adjusted revenue of $2.07 billion in the third quarter 2016, beating the analysts’ estimates for revenue of $2.05 billion. EA’s revenue grew 7.4 percent to $1.15 billion due to the strong sales of first-person shooter game “Battlefield 1”.
Electronic Arts had launched its highly anticipated “Battlefield 1” game, as well as “Titanfall 2” in October and released “FIFA 17,” the latest version of its top-selling soccer franchise, at the end of September. However, sales of “Battlefield 1” exceeded expectations, while”Titanfall 2″ sales fell short of projections. In early November, Activision Blizzard came out with its own shooter game, a new installment of “Call of Duty,” one of the industry’s most popular franchises of all time. It is expected that the “Battlefield 1” has sold 15 million copies in the holiday quarter, which means that it is likely fared better than EA’s “Star Wars Battlefront,” and has sold more than 13 million copies in the final quarter of 2015, in addition to costing the company a royalty fee. It is also estimated that “Titanfall 2” has sold about 5 million units in the holiday quarter. Moreover, the company has lined up games in a strong slate of holiday-quarter titles such as Activision Blizzard Inc’s “Call of Duty: Infinite Warfare” and Ubisoft Entertainment SA’s “Watch Dogs 2”.
Electronic Arts are expecting the earnings per share of $1.64 per share in the fourth quarter, and adjusted revenue is expected to be $1.08 billion. The analysts on average were expecting revenue of $1.11 billion, which is slightly below the EA’s estimates. This is due to the fact that EA had expected to launch two games in the quarter, but postponed one of them, NBA Live, to later in the year. EA has not raised the full-year outlook for revenue of $4.8 billion, due to the concerns about foreign-exchange rates. As a result, EA stock fell over 1% in the pre-market session on February 1st, 2017.
EA stock has risen 29.26% in the last one year (source: Google Finance). According to tipranks.com, 15 analysts has covered the stock while recommending a “Strong Buy”. EA has an average price target of $95.18, which is a further upside of 14.08%.
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