Wall Street analysts hit Electronic Arts (EA) stock with a volley of price-target cuts Friday after the video game publisher postponed the release of its big holiday-season title "Battlefield 5." EA stock dropped for the second straight day on the news.
XEA announced Thursday that it is delaying the release of "Battlefield 5" by four weeks until Nov. 20. The Redwood City, Calif.-based company said it wants to make some last-minute improvements to the game.
At least 10 analysts cut their price targets on EA stock after the announcement. Bank of America Merrill Lynch downgraded EA and rival Activision Blizzard (ATVI) to neutral from buy.
EA stock fell 2.2% to 113.41 on the stock market today. It tumbled 9.8% on Thursday.
EA also lowered its sales guidance by $350 million for the fiscal year ending March 31. It cited the "Battlefield 5" delay, a revised mobile-game forecast and the impact of foreign exchange rates for the guidance change.
Delay Could Benefit Sales
The one-month delay could help "Battlefield 5" sales because it now will launch in a less-competitive time frame, Baird analyst Colin Sebastian said. The original Oct. 19 release put it head-to-head with "Call of Duty: Black Ops 4" from Activision and "Red Dead Redemption 2" from Take-Two Interactive Software (TTWO).
Plus, the delay will let EA improve the core gameplay and live services for its World War II-themed shooter game, Sebastian said.
"Our experience suggests there is usually a favorable trade-off over the longer term when sacrificing near-term sales for improved product quality," he said in a report to clients. Sebastian rates EA as outperform with a price target of 154.
Cowen analyst Doug Creutz reiterated his market perform rating on EA and cut his price target to 111 from 114.
"While the company is attributing the delay purely to wanting more time to polish, we suspect preorder performance also had something to do with it," Creutz said in a report. "Were it up to us, we'd be tempted to push 'Battlefield 5' to the March quarter, to give it an even more open release window. The company can really not afford another damaged AAA franchise."
EA Possible Acquisition Target
Macquarie Capital analyst Benjamin Schachter also thinks weak preorders were behind the delay.
"EA's decision to move 'Battlefield 5' out of its crowded October release date and into November we believe indicates weak preorder numbers and a growing concern that the game would get lost amid the launches of 'Call of Duty' and 'Red Dead,' " he said.
The delay could give EA time to add a "battle royale" game mode, he said in a report. That feature likely was not going to be available for the original launch date, he said.
If EA stock remains at depressed levels for any sustained period of time, it could become an acquisition target, Schachter said.
RELATED:
Game Publisher Delays 'Battlefield 5'
The post Electronic Arts Smacked With Price-Target Cuts On Game Delay appeared first on Investor's Business Daily.
http://feedproxy.google.com/~r/BusinessRss/~3/3BhZMaFhu8g/
No comments:
Post a Comment