Electronic Arts Stock Gains 3% on BofA’s Upgrade

BofA Securities upgraded Electronic Arts (NYSE:EA) to Buy from Neutral, citing an unjustified current discount and promising early indicators for fiscal 2024. The price target was raised by $5 to $150 per share. EA stock gained more than 3% intra-day today.

Despite a somewhat static performance of EA's shares since January, influenced by factors such as weak fiscal 2024 guidance, challenging comparisons for EA SPORTS FC post-World Cup, and a limited launch pipeline, analysts find the risk balance now appealing for several reasons. EA's relative valuation is lingering near a five-year low, suggesting the stock might be undervalued relative to its historical performance. The early data from the EA SPORTS FC 24 launch suggests there could be a potential upside to Street estimates and guidance, presenting a positive signal for the company's performance going forward.

Moreover, estimates for fiscal 2025 and beyond could witness a series of upward revisions as EA potentially benefits from above-trend growth in the PC and console game market from 2024 onwards.

This analysis comes amidst a critical rebranding period, with the transition from FIFA to EA SPORTS FC representing one of the most significant in the gaming industry, and thereby fostering investor prudence.