Electronic Arts slips as MKM Partners downgrades, citing lowered growth outlook for 2024
Sundry Photography

Electronic Arts (NASDAQ:EA) shares fell on Wednesday as investment firm MKM Partners downgraded the video game giant, citing lowered growth outlook for fiscal 2024 and the potential for further pressure on margins.
Analyst Eric Handler lowered his rating on Electronic Arts (EA) shares to neutral from buy, while also cutting the price target to $131 from $149, noting that while the depth of the company's development pipeline is still "sizable," there will not be any acceleration in releases in fiscal 2024, with most coming in fiscal 2025. There is also the likelihood that operating margins will continue to decline in the next fiscal year. 
"Combining these variables with a lack of near-term catalysts, we no longer see sufficient upside in the shares to justify a Buy rating," Handler wrote in a note to clients.
Electronic Arts (EA) shares fell 1% to $123.44 in premarket trading. 
In addition, Handler noted that while EA (EA) is seen as an acquisition target, one that "does make a lot of strategic sense," the pool of acquirers is seen as "limited" and no deal is seen as "imminent."
Late last month, it was speculated that Amazon (AMZN) was in talks to acquire EA (EA), but those rumors were quickly squashed. 
Comcast (CMCSA) has also been speculated to acquire EA (EA) in the past, but nothing has come to fruition so far.
Rival Activision Blizzard (ATVI) is currently in the process of being acquired by Microsoft (MSFT) for $69B.
Handler also noted that the outlook for EA's (EA) fiscal 2023 is unchanged and estimates could wind up being conservative, depending on how successful games such as the sequel to Star Wars Jedi: Fallen Order and the remake of Dead Space attract players. 
However, the analyst added that EA (EA) could have benefited next fiscal year from more releases, including Skate, Dragon Age, a new Star Wars game, a new Battlefield title and a few casual mobile games. 
"We now question the depth of the release slate and believe [fiscal 2025] is a more realistic launch period for a number of these games," Handler explained.
Last month, Electronic Arts (EA) declared its quarterly dividend of 19 cents per share, in line with its previous payout to shareholders.
Analysts are largely positive of Electronic Arts (EA). It had an average rating of BUY 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.