Electronic Arts rises as BofA upgrades, says discount 'unwarranted' going into 2024
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Electronic Arts (NASDAQ:EA) shares rose more than 2% in pre-market trading on Tuesday as Bank of America upgraded the video game maker, stating that the discount in its stock compared to its peers is "unwarranted."
Analyst Omar Dessouky moved his rating on EA (EA) shares to buy from neutral and bumped his price target to $150 from $145, noting that the recently released
FC 2024 is just the first of "many catalysts."
Dessouky said that the risk in the stock is skewed attractively as its relative valuation is near a five-year low and early statistics from the launch of FC 2024 suggest there could be "upside" to Wall Street estimates and guidance. Additionally, fiscal 2025 and beyond could see a number of upward revisions, as EA (EA) benefits from above trend growth in the PC and console gaming markets.
"We expect results & guidance to dispel investor skepticism over SPORTS FCâs ability to grow [year-over-year in fiscal 2024]," Dessouky wrote in a note to clients, adding that the higher average selling price on the base model, as well as the shift to the Ultimate edition and mobile version could bring growth in the franchise above management's expectations.
Additionally, an extended early access period and exclusive perks should "drive higher monetization on FC Ultimate Team," Dessouky explained.
EA launched EA Sports FC 24 in late September, its first soccer game since breaking up with FIFA after nearly 30 years.
Dessouky said that EA, which competes against the likes of Activision (ATVI), Take-Two (TTWO), Microsoft (MSFT), Nintendo (OTCPK:NTDOY) and others, is likely to see a gain in wallet share from its largest franchises as it expands ways to play games. 
"[R]esearch has shown that playersâ in-game spending is highly correlated with the amount of time spent inside a gameâs ecosystem," Dessouky stated.
Analysts are largely bullish on EA (EA). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates EA a HOLD.

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