Electronic Arts Inc. EA hit a new 52-week high of $68.48 on Jul 2, 2015, closing the session slightly lower at $67.80. The stock has gained approximately 7% over the past 30 days and is up 45.6% over the past six months.
The company’s shares have continuously been on an uptrend since it participated in the Electronic Entertainment Expo (E3) 2015. It is one of the major stocks in the video game business to have benefited significantly from the show.
EA has been the primary beneficiary of the ongoing shift from physical to digital versions of video games. The digital business is expected to remain a key driver for the company and will offset weak growth in traditional packaged-goods games. The company expects the digital business (50% of revenues) to continue to grow in fiscal 2015 and beyond, primarily on the back of a strong mobile business. Currently, EA SPORTS titles are a major hit among mobile gamers. In addition, the company’s freemium and extra content services are generating significant market traction, driving top-line growth.
Going forward, the company expects new launches such as Madden NFL Mobile, FIFA 15 Ultimate Team and SimCity BuildIt to propel growth. Meanwhile, all-time favorites like Real Racing 3, The Sims FreePlay and The Simpsons: Tapped Out remain key growth drivers. In addition, the company’s exclusive partnership with China-based Internet company, Tencent Holdings Limited, is expected to foster its digital business, especially aiding penetration in the Far East.
However, the company faces multiple headwinds that include significant competition from other game makers such as Glu Mobile Inc. GLUU, Activision Blizzard, Inc. ATVI and Take-Two Interactive TTWO.
Currently, Electronic Arts sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment