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Electronic Arts (ERTS) shares were on the rise Friday, as expected, following a well-received December quarter earnings report.

Two analysts upgraded the stock Friday.

Deutsche Bank’s Jeetil Patel went to Hold from Sell on the stock, based on “improving cost control, complemented by high margin online advertising and micro-transactions - which together reduce the risk of margin erosion in the next cycle.” Patel says he nonetheless remains concerned about growth, noting that “EA’s lackluster product quality and rich valuation remain.”

Needham’s John Lynch and Charlie Wolf not only upgraded the stock, they even think you should own it. Needham went to a Buy from a Hold. They say that what had been holding them back from recommending the stock before was a lack of commitment to the Nintendo Wii console and DS handheld.

“However, Electronic Arts.. vigorously expressed a commitment to the hot selling Nintendo platforms,” they wrote. “With this commitment in place we are more comfortable that EA will achieve the diversification necessary to weather the unpredictability of the ongoing console transition.”

One other interesting tidbit to pass along, this from Paul-Jon McNealy, an analyst with American Technology Research. McNealy says there was some confusion Thursday on the call over the company’s announcement of an accounting change for online revenue, which it will recognize over time rather than all upfront. McNealy says the treatment of this revenue “obscured the more important piece of information- that material online revenue is coming, and before other revenue streams such as in-game advertising materialize.” McNealy maintains a Buy rating on the stock.

Electronics Arts shares Friday were up $1.87 at $52.41.

ERTS 1-yr chart

erts chart

Source: Electronic Arts: Street Celebrates Strong December Quarter