Electronic Arts Inc. EA hit a new 52-week high of $64.30 in yesterday’s trading session and eventually closed at $63.27.
The company’s shares have been on an uptrend since it reported fourth quarter fiscal 2015 results on May 5, having gained nearly 7% so far. In the year-to-date time frame, Electronic Arts has returned over 34.6% compared with the S&P 500’s return of 3% in the same period.
The company witnessed a solid fourth quarter driven by a strong games portfolio, strength in new consoles and continuing growth in the mobile market. Also, better-than-expected sales of Battlefield Hardline contributed to the top line. Moreover, strong growth in digital sales coupled with cost optimization initiatives are expected to be beneficial, going forward.
In addition, increased consumer spending on smartphones and tablets will boost the company’s online business. We expect Electronic Arts to benefit from its upcoming game titles along with new partnerships that will help the company expand internationally.
Furthermore, positive estimate revisions over the last 30 days have led to an increase in the Zacks Consensus Estimate. Estimates moved up 7.7% and 10.1% to $2.38 and $2.84 per share, respectively, for fiscal 2016 and 2017.
However, the company faces a number of headwinds that include significant competition from other game makers such as Glu Mobile Inc. GLUU and Take-Two Interactive TTWO. Another gaming stock that hit a 52-week high is Activision Blizzard, Inc. ATVI. It touched $25.88 in yesterday’s trading session, before closing at $25.73.
Currently, Electronic Arts sports a Zacks Rank #1 (Strong Buy).
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