NEW YORK (AP) -- Shares of Electronic Arts and other video game stocks fell Friday, after the company reported sales for its latest "Madden NFL" game that were lower than last year's version.
A Brean Capital analyst added pressure to the sector, cautioning investors about buying video game stocks, saying that they may fall since the group is already "priced to perfection." He noted that EA shares are up 91 percent since the start of the year, while Activision Blizzard shares have added 62 percent and Take Two Software has gained 69 percent.
Electronic Arts said late Thursday that is sold more than 1 million units of "Madden NFL 25" during its first seven days in stores, making it the best-selling game in North America last month.
Last year, however, Electronic Arts sold 1.65 million of "Madden NFL 13" in its first week.
Brean Capital analyst Todd Mitchell said slower sales are to be expected, because consumers are likely waiting for new consoles to be released in the next few months before picking up the newest version of the game.
Microsoft Inc.'s Xbox One and Sony Inc.'s PlayStation 4 will be released this fall.
"We continue to maintain a positive stance on the Video Game group on the basis that this console cycle will be kinder to the third party publishers than the last cycle," Mitchell wrote in a note to clients. But with those gains already notched, he said, shares are "beginning to look a little frothy in our opinion." He nevertheless kept "Buy" ratings on EA and Activision and a "Hold" rating on Take Two. He cautioned that there is a risk the stocks will fall if sales falter over the next few months.
Shares of Electronic Arts Inc. dropped 89 cents, or 3.2 percent, to $26.79 in afternoon trading.
Mitchell said that he expects strong sales of Activision Blizzard Inc.'s "Destiny" in 2014. He said that its "Infinity" game, which features The Walt Disney Co.'s characters, is "gaining traction." Activision shares slipped 17 cents, to $17.
The analyst also expects strong sales of Take-Two Interactive Software Inc.'s "Grand Theft Auto V," which will be released in mid-September. Shares of Take-Two fell 52 cents, or 2.8 percent, to $18.14.
Electronic Arts, Activision Blizzard and Take-Two Interactive did not immediately respond to an emailed request for comment.
Shares of GameStop Corp., the video game retailer, lost $1.30, or 2.5 percent, to $49.90. Shares of Zynga Inc., which publishes online games such as "FarmVille," gained a fraction to $3.01.
- Video Games
- Investment & Company Information
- Electronic Arts
- Activision Blizzard
- Madden NFL
- Todd Mitchell