Video game maker Electronic Arts (NASDAQ: EA) reported fourth-quarter earnings this week, more than justifying the stubbornness of stock prices in recent weeks. The stock market was constantly sold out while it turned out to be one of the worst starts in living memory, but EA’s share has fallen by only about 20% from last year’s highs. ..
If this were last year, such a performance would be devastating, but in the context of 2022 it’s really fascinating. The S & P 500 Index is declining in much the same way, but the technology-intensive NASDAQ Index is down nearly 30% from its all-time high. Look at the name of the individual Netflix (NASDAQ: NFLX) Stocks fell 75%, Facebook (NASDAQ: FB) 50% decrease, Amazon (NASDAQ: AMZN) It is down more than 40%. Perhaps it is permissible to think that video game stocks have replaced gold as a traditional safe haven for stock investors.
Take a look at their numbers and see what’s behind the bull’s stubbornness.
To begin with, the company’s EPS was healthy at $ 0.80, well above what analysts expected. Quarterly revenue was slightly weaker in consensus, but still increased by more than 17% annually. Investors have also learned that the EA Player Network has grown 16% year-on-year to over 580 million unique active accounts. These are good growth numbers, especially since the industry numbers haven’t been high so far this year.
Video game sales surged during COVID, but have been declining since the end of last year, thanks to more people being trapped in their homes than ever before. New figures this week show that consumer video game spending in the first quarter fell by 8% compared to the same period in 2021. I continued to struggle to get the new console into the hands of the buyer. “
So if EA can still push reports like this, it’s easy to see why Wall Street still loves jib cuts so much. EA CEO Andrew Wilson said, “22 is a record year, with hundreds of millions of players from around the world participating in our games playing, watching and creating with each other. Built around a great game, strong IP created by an incredibly talented team, and outstanding involvement in live services, FY23 will be a year of innovation and growth for Electronic Arts. prize.”
Chris Suh, CFO of the company, said: The foundation of a deeply involved player, abundant IP, and a resilient business model. It will continue to invest to achieve growth beyond FY2011. “
In addition to all this, management signaled a bullish week this week when investors raised the company’s dividend by 12%. This is one of the most bullish signals investors can get and shows that management is very confident about the company’s outlook for the coming months. Strong reporting and dividend increases were not overlooked. Moffett Nathanson has upgraded the rating of EA shares from Neutral to purchase and set a price target of $ 141. From $ 120, when stocks closed on Thursday, this suggests that we’re still seeing a rise of about 16%. Jeffreys’ team reiterated their purchases, surprised by the increased guidance throughout the year under current sector pressure.
Wedbush also maintained an outperform rating, but adjusted its goal to $ 164. Analyst Michael Pachter said the quarter was in line with his expectations, but “foreseen by cost discipline, digital sales growth, some major franchises, and several recent acquisitions. Future growth is expected. ” Credit Suisse made a similar move, lowering its price target to $ 162. This suggests a 30% increase from current levels.
It’s a difficult time to be a stock investor now, but EA could be one of the best places to park your cash right now.