Electronic Arts Inc.
 (EA)

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  • Dec. 30, 2015, 6:28 PM
    • Macquarie's still bullish on the major videogame publishers in a new update, maintaining Outperform ratings on Activision Blizzard (ATVI -0.4%), Electronic Arts (EA -0.3%) and Take-Two Interactive Software (TTWO -0.9%).
    • The firm's Ben Schachter went into some detail about structural differences in how the three grow margins. While U.S. publishers have traditionally hit operating margins of 10-30% (vs. Asian PC-centric companies at 40-45% or more), he says Activision could grow closer to 40-45% over time, and that EA and Take-Two could grow past 35%.
    • Among differences, he noted that Activision and Take-Two amortize software development costs in costs of goods sold as they recognize revenue, while EA expenses development costs as they occur, in the R&D line below gross profit.
    • As for revenue, while the companies have many similarities (based on wholesale price for AAA physical, a net basis for digital revenues and for China PC distributors), they differ on mobile, where Activision recognizes gross (100%) while EA and Take-Two recognize net (70%).
    • Macquarie had boosted its price target to $36 for ATVI on Nov. 4 (it closed at $39.43 today); it holds targets of $83 for EA (19% upside implied); $38 for TTWO (7% upside implied).
    • Previously: Pacific Crest: Activision won holiday videogaming with 'Call of Duty' (Dec. 30 2015)
    | Dec. 30, 2015, 6:28 PM | 2 Comments
  • Dec. 30, 2015, 2:37 PM
    • Pacific Crest has named Activision Blizzard (NASDAQ:ATVI) the holiday season's videogames winner, on the success of Call of Duty: Black Ops 3.
    • "Our checks have consistently mentioned CoD as the top game this holiday season and that sales are up year over year due to the first three-year development cycle for Black Ops and the return of the ever-popular Zombies mode," says Pac Crest's Evan Wilson. "We remain positive on ATVI headed into 2016."
    • Wilson rates Activision Overweight with a price target of $41; shares are flat today at $39.59.
    • He's more neutral on rivals Electronic Arts (EA +0.4%) and Take-Two Interactive (TTWO -0.1%); Take-Two had a "relatively successful holiday" thanks to NBA 2K16. Meanwhile, EA's Star Wars: Battlefront saw sales driven down by discounts -- "We continue to think sales are only around the 13M unit guidance" -- and the company missed an opportunity with timing. "We would stay on the sidelines as shares look for a next catalyst beyond Star Wars."
    | Dec. 30, 2015, 2:37 PM
  • Dec. 11, 2015, 2:49 PM
    • NPD estimates U.S. physical retail video game sales fell 7% Y/Y in November to $993.9M, after having dropped 3% in seasonally weaker October to $349.4M. Aggressively-priced console bundles likely weighed on standalone game sales. Hardware sales rose 11% to $1.12B after being roughly flat in October, and peripheral/interactive toy sales rose 6% to $357.7M after rising 18% in October.
    • Not surprisingly, Activision's (ATVI -3.2%) Call of Duty: Black Ops III was the month's top-selling game, followed by Bethseda's Fallout 4. However, Activision's Destiny: The Taken King fell out of the top-10, after coming in at #7 last month.
    • Electronic Arts' (EA +1.2%) Star Wars: Battlefront, which recently saw a $20 GameStop price cut amid mixed critic and user reviews, was #3. EA also took the #4, #6, and #7 spots via Madden NFL 16, FIFA 16, and Need for Speed. Madden and FIFA were also #4 and #6 last month.
    • Take-Two's (TTWO -1%) NBA 2K16 dropped three spots to #5, while WWE 2K16 fell out of the top-10. Ubisoft's (OTCPK:UBSFY) Assassin's Creed: Syndicate and Just Dance 2016 were #9 and #10; neither was in the top-10 last month.
    • Microsoft's (NASDAQ:MSFT) Halo 5: Guardians fell from #1 to #8. With Halo 5 providing less of a lift to Xbox One sales, the PlayStation 4 (NYSE:SNE) regained its status as the top-selling U.S. retail console.
    • EA remains green following the data and news the company is entering the eSports market. Activision (like GameStop) is underperforming amid a 1.8% Nasdaq drop, and Take-Two is down modestly.
    • Last month: Black Ops 3 sells $550M in opening weekend
    | Dec. 11, 2015, 2:49 PM | 4 Comments
  • Dec. 11, 2015, 2:12 PM
    • Mattel (MAT +2.9%), Hasbro (HAS +1.1%), Electronic Arts (EA +1.7%), GoPro (GPRO +2.3%), and Spiral Toys (OTCQB:STOY +3.6%) are all ahead of broad market averages.
    • The eclectic group of companies, which share in common that they sell products that are frequently opened on Christmas morning, could be benefiting from a stronger-than-anticipated retail sales report.
    • Previously: Retail sales pick up momentum despite underwhelming Black Friday (Dec. 11)
    | Dec. 11, 2015, 2:12 PM | 7 Comments
  • Dec. 11, 2015, 11:03 AM
    • Electronic Arts (NASDAQ:EA) has formed an EA Competitive Gaming Division (CGD) to take part in the lucrative and growing eSports (competitive gaming) market. COO Peter Moore will now serve as the division's chief, under the title of EVP and chief competition officer.  EA Sports vet Todd Sitrin will serve as SVP and general manager of CGD.
    • EA: "[T]his group will enable global eSports competitions in our biggest franchises including FIFA, Madden NFL, Battlefield and more ... CGD will seek to build a best-in-class program to centralize our efforts with new events, as well as the infrastructure to bring you the world’s preeminent EA competitive experiences."
    • Rival Activision created an eSports division in October. Last year, Amazon bought top live game-streaming platform Twitch, which is often used to broadcast major eSports events. YouTube has also shown an interest in the space.
    • SuperData Research estimates the global eSports market will grow to over $1.9B in 2018 from $749M in 2015. EA is rallying on a day the Nasdaq is down 1.4%.
    • Update: Baird's Colin Sebastian applauds EA's move, and estimates eSports initiatives such as tournaments, ads/sponsorship deals, broadcasting, wagering could boost EPS by $0.20-$0.30 over the next few years.
    | Dec. 11, 2015, 11:03 AM | 1 Comment
  • Dec. 9, 2015, 1:26 PM
    • GameStop (GME -2.4%) has cut the price of a new physical copy of Electronic Arts' (NASDAQ:EA) Star Wars: Battlefront by $20 to $40. Other major retailers are still selling the game for $60 or close to it.
    • The move comes shortly after GameStop exec Tony Bartel stated initial Battlefront sales were disappointing. "We're not going to quantify it in terms of actual numbers, but we had high expectations that diminished somewhat as it got closer and it failed to hit those lowered expectations." GameStop plunged last month in response to weak FQ3 results and FQ4 guidance.
    • EA COO Peter Moore disputed Bartel's take. "There is no weakness that is perceptible yet in the title and I want everybody understand that based on where we think this title is and based on the marketing beats ahead of us, in particular the movie launch over the next two weeks, we feel very comfortable we're going to hit the numbers we've given analysts, investors and Wall Street alike."
    • However, CFO Blake Jorgensen has admitted Battlefront may not appeal to some hardcore gamers. "We had designed it to be a much more accessible product to a wide age group. So, an eight-year-old could play with his father on the couch, as well as a teenager or 20-year-old could play the game and enjoy it. It is more accessible. And for the hardcore, it may not have the depth that they wanted in the game." The game currently has a Metacritic rating of 72/100, and a Metacritic user rating of just 5.0/10.
    • EA is off sharply on a day the Nasdaq is down 1.8%. Piper recently argued EA investors should focus on the company's FY17 (ends March '17) game pipeline rather than Battlefront's performance.
    • Update (2:03PM ET): Macquarie's Ben Schachter is defending EA. "While the stock is trading down today on the news, we believe this is a pre-planned GME price cut in conjunction with EA to support the retail sales of the game for the holidays. We note that the same holiday price drops occurred with EA’s Battlefield 4 and Battlefield 3 ... We do not see the price change as underlying weakness in the title, and still expect our previous estimate of 13m units in FY’16." EA is now down 5.6%.
    | Dec. 9, 2015, 1:26 PM | 13 Comments
  • Dec. 4, 2015, 1:37 PM
    • Investors are buying back into consumer staples and consumer discretionary names, while tip-toeing around major chains such as Wal-Mart, Target, Best Buy, and Macy's. Some sin stocks are part of the rally.
    • Lower oil prices, today's read on U.S. employment, and a few key earnings report have helped to increase confidence that consumers will spend more on low-priced items. Notable movers by category are below.
    • Nondurable household products: Scott's Liquid Gold-Inc (OTCPK:SLGD +4.5%), Procter & Gamble (PG +2.5%), Church & Dwight (CHD +1.6%), Spectrum Brands (SPB +1.4%).
    • Toys/Video games: Electronic Arts (EA +4.6%), Mattel (MAT +4.3%), Activision Blizzard (ATVI +3.2%).
    • Tobacco: Reynolds America (RAI +3.1%), Altria (MO +2.5%).
    • Beverages: Brown-Forman (NYSE:BF.A) +3.2%, Constellation Brands (STZ +2.8%), Coca-Cola (KO +2.3%), PepsiCo (PEP +2%).
    • Footwear: Nike (NKE +2.6%), Skechers (SKX +1.9%), Wolverine Worldwide (WWW +2.2%).
    • Related ETFs: XLY, XRT, VCR, RTH, RETL, IYK, IYC, FXD, FDIS, SCC, UCC, RCD, PMR, UGE, SZK, BITE
    | Dec. 4, 2015, 1:37 PM | 15 Comments
  • Dec. 4, 2015, 12:38 PM
    • Electronic Arts (EA +4.8%) is bouncing back from some early Star Wars game worries as investors and analysts start to look beyond its latest release and to what looks like a packed slate ahead.
    • Today, Atlantic Equities has bumped its rating on the stock to Overweight, from Neutral. It has a price target of $84; that implies more than 19% upside from a current $70.47.
    • Piper Jaffray this week warned "Don't get overly focused on one title," as worries mounted about early performance of Star Wars: Battlefront. Speaking as part of a Credit Suisse investor conference, EA's COO Peter Moore pointed to am "embarrassment of riches" coming to the lineup as soon as April, when the company's fiscal 2017 begins.
    • "We've got some of our core franchises; a new Battlefield coming up, a new Mass Effect title coming up; we actually kick off the year with Mirror's Edge Catalyst, which we pushed out of FY 16 and into FY 17 ... And we also have Mass Effect Andromeda from our BioWare studio. And Plants vs. Zombies: Garden Warfare 2 is shipping in Q4 of this year."
    • He had skipped over mentioning the company's annual sports tentpole titles as well as a new Titanfall coming during fiscal 2017 as well.
    • Previously: Cowen sees strong videogame holiday, with Activision its top pick (Dec. 02 2015)
    • Previously: EA +1.1% as Piper Jaffray looks beyond 'Star Wars,' urges buying on weakness (Dec. 02 2015)
    | Dec. 4, 2015, 12:38 PM
  • Dec. 3, 2015, 10:49 AM
    | Dec. 3, 2015, 10:49 AM | 4 Comments
  • Dec. 2, 2015, 8:53 PM
    • Activision Blizzard (ATVI -0.5%) is the top pick among videogame makers in a new report from Cowen & Co., which has crunched some numbers from Thanksgiving weekend indicators and sees a strong holiday for three firms.
    • Cowen analyst Doug Creutz says Activision rates an Outperform, and so do Electronic Arts (EA +1%) and Take-Two Interactive (TTWO -0.3%).
    • Activision's Call of Duty: Black Ops 3 was a top seller over the Black Friday weekend, and analysts not only favor the company's move to buy King Digital (NYSE:KING) but also think its guidance may be conservative with outstanding content ahead. Cowen's price target is $44, implying 15% upside from today's close of $38.38.
    • EA, meanwhile, put two SKUs for Madden NFL 16 into the top 20 sellers over the holiday weekend, despite passing on aggressive discount pricing from years past. Cowen's price target is $79 (14% upside from today's $69.34). For Take-Two, Cowen has a price target of $36; shares closed today at $35.88.
    | Dec. 2, 2015, 8:53 PM
  • Dec. 2, 2015, 10:46 AM
    • Most commentary on Electronic Arts (NASDAQ:EA) has turned on one key catalyst, in the release of Star Wars: Battlefront, and on just how well the game will do amid some middling early reviews and varying projections.
    • The stock is up 1.1% as Piper Jaffray says it's a buy regardless, with a strong slate ahead and a buying opportunity on price. The firm reiterated its Outperform rating and has an $87 price target (25% upside from today's price of $69.38).
    • Reports of weakness at GameStop are counteracted by the game being EA's biggest-ever digital launch, it says; if FIFA 16 was previously EA's biggest digital launch, Piper assumes 4M units of the soccer game were digital. If Star Wars were on track for 5M digital units in fiscal 2016, it's assuming that's a one-third count and the game is on track for 15M total units, above its projected 13.5M.
    • Not only will new content boost some lackluster early reviews, but "Don't get overly focused on one title," Piper says. "While Star Wars is a significant title and will be important as future iterations ship in years to come, we would encourage investors to consider that the FY17 pipeline appears more attractive than FY16, with the combination of Battlefield 5, Mass Effect, and Titanfall likely to contribute [more than] 20M units to the year."
    • Previously: Electronics Arts down again, -2%; Oppenheimer still bullish (Nov. 24 2015)
    • Previously: Macquarie: Despite reviews, EA's 'Star Wars' game likely to be big hit (Nov. 18 2015)
    • Previously: EA launches 'Star Wars: Battlefront' to mixed reviews (Nov. 17 2015)
    | Dec. 2, 2015, 10:46 AM | 2 Comments
  • Nov. 25, 2015, 8:48 AM
    • Sales of Star Wars consumer products could reach $5B over the first year after the December release date of Star Wars: The Force Awakens, according to some high-flying projections.
    • The mark would smash the previous movie product sales record of $2.8B set by Cars 2.
    • Disney (NYSE:DIS) turned the screws on licensing partners by working a deal for a ~20% royalty which is about double the normal rate. Hasbro (NASDAQ:HAS) is the major licensee for Star Wars toys, while a host of other companies have bits and pieces - including Jakks Pacific (NASDAQ:JAKK), Lego, Kay Jewelers (NYSE:SIG), Topps, Electronic Arts (NASDAQ:EA), Rubie's Costume Company, and even CoverGirl (NYSE:COTY).
    | Nov. 25, 2015, 8:48 AM | 28 Comments
  • Nov. 24, 2015, 2:13 PM
    • Electronic Arts (NASDAQ:EA) is down for a second day, -2%, after disappointing GameStop results sent major game makers lower.
    • Oppenheimer, though, is joining in with Macquarie on the opinion that worries about Star Wars: Battlefront are likely overdone.
    • “We believe the selloff is excessive, and that the title will sell strongly in the coming months," wrote analyst Sean McGowan. "We recommend investors buy on the weakness."
    • Other factors may contribute to GameStop's note that Battlefront isn't meeting its expectations, he says: More customers could be choosing to buy online rather than from physical retail, and GameStop's own plans to feature the game in its Black Friday sales could mean customers deferring purchase decisions until the weekend.
    • The firm maintains an Outperform rating on EA shares and a price target of $83; with shares currently trading at $67.64, that implies 23% upside from here.
    • Previously: EA, Activision, Take-Two lower after GameStop disappoints (Nov. 23 2015)
    • Previously: Macquarie: Despite reviews, EA's 'Star Wars' game likely to be big hit (Nov. 18 2015)
    • Previously: EA launches 'Star Wars: Battlefront' to mixed reviews (Nov. 17 2015)
    | Nov. 24, 2015, 2:13 PM | 3 Comments
  • Nov. 23, 2015, 11:55 AM
    | Nov. 23, 2015, 11:55 AM | 12 Comments
  • Nov. 18, 2015, 12:13 PM
    | Nov. 18, 2015, 12:13 PM | 3 Comments
  • Nov. 17, 2015, 3:18 PM
    • It's launch day for Star Wars: Battlefront, one of the year's biggest videogame rollouts, but Electronic Arts (NASDAQ:EA) may want to skip the earliest reviews.
    • The game is getting a 73 rating -- "mixed or average reviews" -- on Metacritic for its Xbox One version (15 critics). The PlayStation 4 version is faring a bit better with a 78 (generally favorable), from 13 critics.
    • EA shares are flat today, while rivals Activision Blizzard (ATVI +3.1%) and Take-Two (TTWO +2.4%) are much stronger.
    • Mizuho's Neil Doshi is unperturbed; many of the worst reviews were from people expecting a single-player campaign, he says, and major sites have yet to post their takes. He still agrees with EA that the company could sell 13M units by the end of March and reiterated a Buy rating and $84 target (near 24% upside implied).
    • Along with reviewers, Piper Jaffray's Michael Olson noted a dearth of content in the game as sold, but industry trends suggest that can be remedied by a year of strong downloadable content that EA could provide. Olson has an Overweight rating and an $87 price target.
    • Previously: EA +1% as Oppenheimer launches at Outperform on strong slate, margins (Nov. 12 2015)
    • Previously: Electronic Arts sinks 5% after beat-and-raise, bullish targets (Oct. 30 2015)
    • Previously: Electronic Arts +1.6% as Piper Jaffray reiterates Buy (Oct. 27 2015)
    | Nov. 17, 2015, 3:18 PM | 15 Comments
Company Description
Electronic Arts Inc develops, markets, publishes and distributes video game software and content that can be played by consumers on various platforms.