EA Stock Analysts Predict Mixed Results Amid Weak Guidance

EA shares decline amid mixed Q3 results. Despite a jump from share buybacks, analysts foresee a challenging path ahead as EPS is expected to fall 8.7% year-over-year.

Date: 18-02-2025

AI Rating: 5

Market Performance: Electronic Arts Inc. (EA) has underperformed compared to the broader market over the past year, with shares down 9.6% versus a 22.3% gain in the S&P 500. Year-to-date, EA has seen an 11.6% decline while the S&P 500 is up nearly 4%. This underperformance can signal investor concerns and may lead to further stock price pressure.

Earnings Per Share (EPS): EA reported weaker-than-expected adjusted EPS of $2.83 for Q3 and is projected to experience an 8.7% decline year-over-year in EPS for the fiscal year ending in March 2025, down to $4.75. This negative outlook on earnings is a significant factor that may adversely affect investor sentiment and, subsequently, stock prices.

Guidance and Future Projections: While EA maintained its annual bookings forecast, it provided weaker guidance for Q4, projecting bookings of $1.4 billion to $1.6 billion. This signals potential challenges in revenue growth and could further impact stock prices negatively. The acquisition of TRACAB Technologies is a strategic move, but it may not be enough to offset concerns regarding current performance.

Market Reactions: The announcement of a $1 billion share repurchase plan initially drove shares up by 7%, indicating that investor reactions can be significantly influenced by buyback announcements. However, the mixed nature of the earnings surprise history, with only two beats in the last four quarters, reflects uncertainty regarding future performance, which could lead to stock price volatility.

Analyst Ratings and Price Targets: The current consensus rating for EA is a "Moderate Buy" based on 24 analysts, though this is a decline from three months ago when there were more "Strong Buy" ratings. Furthermore, UBS has lowered the price target to $138, reflecting concerns regarding weaker performance in key franchises. Current trading below the mean price target indicates potential downward pressure.

Stocks: EA