On Wednesday, TD Cowen maintained a Buy rating on Electronic Arts (NASDAQ:EA) and increased the price target to $172 from $160, following the company’s financial results for the fourth fiscal quarter. Currently trading at $154.81, EA has demonstrated robust financial health, earning a "GREAT" rating from InvestingPro’s comprehensive analysis. The report highlighted Electronic Arts’ bookings and EBIT figures, which surpassed both TD Cowen’s and the consensus estimates. With an impressive gross profit margin of 79.38% and strong cash flows, this performance was attributed to a strong recovery from FC and notable results from Split Fiction.
The analyst at TD Cowen, Doug Creutz, expressed confidence in the company’s future, citing robust guidance for fiscal year 2026, which includes anticipated launches for the Battlefield and Skate franchises. The firm’s positive outlook is further supported by the delay of Grand Theft Auto VI into fiscal year 2027, positioning Electronic Arts as an attractive investment in the near term. This optimism is reflected in EA’s market performance, with a 19.29% return over the past year and a beta of 0.75, indicating lower volatility than the broader market. Discover more insights about EA’s potential with InvestingPro’s exclusive financial health indicators and 11 additional ProTips.
TD Cowen has adjusted its fiscal year 2026 bookings estimate upwards from $7.71 billion to $7.80 billion, marking a 6% year-over-year increase. This figure aligns with the midpoint of management’s guidance. Additionally, non-GAAP EBIT expectations have been raised from $2.46 billion to $2.60 billion, showing a 17% year-over-year rise. Adjusted EPS projections have also been increased from $7.98 to $8.48, indicating a 20% year-over-year growth.
The revised guidance takes into account an anticipated third fiscal quarter launch for Battlefield, with expected unit sales of 11.5 million within the fiscal year and over $100 million in live service bookings. Skate is projected to launch in the fourth fiscal quarter, with live service bookings forecasted to be less than $100 million. Based on these projections and Electronic Arts’ strategic positioning, TD Cowen has set a new price target of $172, which equates to 13 times the adjusted EBITDA for fiscal year 2027.
In other recent news, Electronic Arts reported fourth-quarter fiscal year 2025 bookings and operating income that exceeded expectations, with bookings reaching $1.80 billion, surpassing estimates from both BofA and the market. This strong performance was largely driven by the success of the EA Sports franchise and the launch of Split Fiction™, which sold approximately 4 million units, nearly double the company’s original forecast. Analysts have responded to these developments with various updates to their price targets. BofA Securities and BMO Capital Markets both raised their price targets to $166, maintaining a neutral stance, while Goldman Sachs (NYSE:GS) increased their target to $155, also keeping a neutral rating. DA Davidson adjusted their price target to $150, citing expectations for future growth in the Battlefield and Skate franchises. Despite the positive outlook, MoffettNathanson downgraded the stock from Buy to Neutral, setting a price target of $163 due to concerns about the stability of the company’s growth foundations. The overall sentiment reflects a cautious yet optimistic view of Electronic Arts’ financial trajectory amidst the competitive gaming market.
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