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UPDATE: Brean Capital Reiterates On Electronic Arts On Strong Evidence Of Efforts To Improve Financial Results

Dwight Einhorn

In a report published Wednesday, Brean Capital analyst Todd Mitchell reiterated a Buy rating on Electronic Arts (NASDAQ: EA), and raised the price target from $38.00 to $40.00.

In the report, Brean Capital noted, “We believe Electronic Arts seeks to overcome a difficult comparison to the release of Battlefield 4 in F2014 with a F2015 line-up geared toward profitability and higher digital revenue with Battlefield: Hardline, a cops and robbers redux of the Battlefield franchise, Dragon Age: Inquisition and its annual EA Sports line-up, now including UFC.

"We have tweaked our estimates only modestly after E3 and continue to be ahead of guidance with our outlook for a 4% increase in Revenue to $4.2 billion and non-GAAP EPS of $1.90. Underpinning our expectations is Battlefield Hardline, a well segmented urban-themed multi-player title, and a combination of EA Sports releases, to comp Battlefield 4 in F3Q14. Moreover, we believe the company has set itself up for increased digital contributions from EASports Ultimate Teams, with FIFA particularly strong, and full-game downloads from both Origin and the consoles.

"While we feel the group is due for a bit of a pause, given what appears to be strong underlying fundamentals for the industry, EA's well segmented line up at E3, and its strong financial management, we are bumping our TP to $40 from $38 and reiterate our Buy rating.”

Electronic Arts closed on Tuesday at $36.36.

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