Electronic Arts Shows Mixed Results Despite Recent Earnings Surge
Redwood City, California-based Electronic Arts Inc. (EA) is a leading developer and publisher of games, content, and services for consoles, PCs, mobile devices, and tablets worldwide. With a market capitalization of $42.3 billion, the company uses various distribution channels to deliver its products directly to consumers and through online platforms.
Year-to-Date Performance Lags Behind Market Trends
In the past year, Electronic Arts has struggled relative to the overall market. EA’s stock has increased by 17.9% year-to-date and 20% over the past year, significantly trailing the S&P 500 Index’s 23.1% gains in 2024 and a 30.4% rise over the last 52 weeks.
Comparison to Video Gaming ETFs
EA has also underperformed when compared to the VanEck Video Gaming and eSports ETF (ESPO), which surged 39.2% in 2024 and recorded a 42.4% gain over the past year.
Recent Earnings Boosts Investor Confidence
Despite these setbacks, Electronic Arts has made a notable turnaround recently. Over the last month, EA’s stock surged by more than 10% following positive reactions to its earnings report. Following the announcement of its Q2 earnings on October 29, EA’s stock price rose by 2.4% and continued to gain momentum in the subsequent six trading sessions. The company reported record Q2 net bookings of $2.1 billion, a 14.2% increase from the previous year, exceeding management’s upper guidance, largely due to the strong performance of its EA SPORTS portfolio.
Earnings Surpass Expectations
Additionally, EA’s adjusted earnings per share (EPS) of $1.62 surpassed analysts’ estimates by 5.9%. Net revenues grew by 5.8% year-over-year to $2 billion, buoyed by recoveries in live services and full game revenues, which also exceeded Wall Street’s expectations. Following this strong quarter, Electronic Arts revised its full-year revenue, earnings, and cash flow projections, enhancing investor confidence.
Future Projections and Analysts’ Ratings
For the current fiscal year ending in March 2025, analysts predict EA will achieve a 12.3% year-over-year growth in adjusted EPS, reaching $5.84. EA’s earnings surprise history is mixed; the company has beaten estimates in three out of the past four quarters, but experienced one miss.
Currently, EA stock carries a consensus “Moderate Buy” rating. Out of the 25 analysts covering the stock, 13 recommend a “Strong Buy,” two suggest a “Moderate Buy,” and 10 propose a “Hold” rating.
Price Targets and Predictions
The current consensus marks a slightly more bullish outlook than a month ago, when 12 analysts favored a “Strong Buy” rating. On October 30, Roth MKM analyst Eric Handler kept a “Neutral” rating while raising the price target to $158.
Although EA’s mean price target of $163.50 offers a modest 1.3% premium above its current levels, the Street-high target of $183 suggests a potential upside of 13.4%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
