Stifel Downgrades Electronic Arts Inc

Investing.com — Stifel downgraded its rating on Electronic Arts Inc (NASDAQ:EA), stating that while the stock showed strong returns in 2024, it is likely to see limited upside in the coming months due to increased competition and a limited release slate.

Stifel cut EA to Hold from Buy with a target price of $167.00 – a nearly 8% increase from EA’s close on Tuesday.

The brokerage noted that while EA has returned nearly 15% year-to-date in 2024, the stock doesn’t appear to have compelling potential for additional gains in the interim.

> “While still positive on the intermediate/longer-term fundamental outlook for EA, following a successful CY2024, we see limited upside for the shares in the interim,” Stifel analysts wrote in a note.

They expressed a lack of conviction towards the upcoming Battlefield game, which is considered “arguably the most important launch of FY 2026 for EA.”

Although confidence in the game is bolstered by the development team, led by Respawn CEO Vince Zampella, the analysts mentioned that Battlefield as a franchise has “much to prove” after disappointing with its last two entries.

The new game is expected to face increased competition from Take-Two Interactive's (NASDAQ:TTWO) GTA VI, set to launch in 2025, along with established competitors like Call of Duty and Fortnite.

Furthermore, Stifel indicated that EA’s recent significant launch, Dragon Age: Veilguard, fell short of initial expectations. Current unit assumptions are now forecasted at 4 million and 2 million for fiscal 2025 and 2026, respectively, compared to previous estimates of 5.4 million and 2.7 million.

Doubts were also raised about whether the success of College Football 25 could be duplicated in fiscal 2026. While acknowledging the long-term prospects for EA’s American football franchises, Stifel pointed out that the stellar sales of College Football 25 were due to pent-up demand from an 11-year hiatus, making such high sales levels likely unsustainable.