In a report released today, Doug Creutz from TD Cowen downgraded Electronic Arts to a Hold, with a price target of $210.00.
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Doug Creutz has given his Hold rating due to a combination of factors surrounding Electronic Arts’ current market situation. The decision to downgrade from a Buy to a Hold reflects the limited potential for alternative outcomes beyond the proposed transaction with private equity buyers at a price of $210 per share. The analyst perceives the likelihood of a competing bid or a failed deal as extremely low, suggesting that the current agreement is the most probable scenario.
Despite some strong performances in EA’s gaming lineup, such as the surprising success of ‘Skate’ and the anticipated release of ‘Battlefield 6’, the video game industry remains fraught with risks and uncertainties, including the impact of generative AI. Additionally, Creutz notes the absence of regulatory hurdles and the unlikelihood of intervention from strategic buyers like Sony or Netflix, who either face financial constraints or strategic misalignment. This context leads to the conclusion that EA’s choice to sell to a financial acquirer indicates a lack of strategic interest from potential higher-paying buyers.
In another report released yesterday, Robert W. Baird also downgraded the stock to a Hold with a $210.00 price target.
Based on the recent corporate insider activity of 102 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of EA in relation to earlier this year.