Electronic Arts Shares Plunge Despite Strong Q1 Results

Shares of Electronic Arts Inc (NASDAQ: EA) tanked in early trading on Wednesday, even after the company reported strong results for the first quarter of fiscal 2024.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

• Benchmark analyst Mike Hickey maintained a Buy rating, while reducing the price target to $153.
• Truist analyst Matthew Thornton reiterated a Buy rating and price target of $150.
• Wedbush analyst Nick McKay reaffirmed an Outperform rating and price target of $155.
• Roth Capital Partners analyst Eric Handler maintained a Neutral rating and price target of $138.

“In Q1, EA met consensus view in terms of net bookings and exceeded the forecasted profitability,” with growth being driven by “the success of EA Sports FIFA and the release of Star Wars Jedi: Survivor.”

Second-quarter (Q2) guidance is “a bit more tempered,” with net bookings and earnings projected lower than the consensus estimates. This “in-part reflects Apex Legends weakness and marketing investments including EA Sports FC release,” the analyst stated.

Electronic Arts reported mixed results for the first quarter but its guidance for the second quarter was “well below” expectations, Thornton said. He added that the guidance reflects “some heavy marketing into the FC launch and likely some conservatism.”

“Net-net, the Star Wars Jedi miss removes some upside in FY24, but recurring revenue was ahead (flow-through to out-years) and no change to multi-year slate assumptions,” the analyst wrote.

The company’s bet bookings came in slightly below Wall Street expectations, although earnings delivered a modest beat, McKay said.

Electronic Arts plans to release at least six more titles in Q2, including “Madden NFL 24 on August 18, Immortals of Aveum on August 22, and EA Sports FC 24 on September 29,” the analyst added.

“EA produced in-line 1QFY24 bookings, but lower than projected operating expenses and higher investment income drove a solid bottom line beat,” Handler said.

“FIFA continues to outperform, which helped offset softness with Apex Legends,” the analyst wrote. “We remain concerned about the development pipeline, both from a timing and an execution standpoint.”

Produced in association with Benzinga