Electronic Arts Inc. (NASDAQ: EA) Mass Effect Andromeda release delayed
Electronic Arts Inc.’s (NASDAQ: EA) highly anticipated game Mass Effect Andromeda has been announced at E3 2015. At that time, it was said the game would release in the holiday quarter of 2016. However, the launch has now been pushed back to early 2017 according to CFO Blake Jorgensen.
Blake was speaking at the Morgan Stanley Technology, Media & Telecom conference. He said the game in question will be released in the fourth quarter. For Electronic Arts, the fiscal year ends on March 31. This means that the game will launch between January and March 2017.
Electronic Arts Inc. gears up for a year of renewal
Blake admitted that Wall Street has high expectations of Electronic Arts this time around, unlike in previous years. Among other titles, the FPS Battlefield 5 will be released in the third quarter (i.e. at the end of CY2016). Titanfall 2, another FPS game built by EA’s partner Respawn, will experience a similar timeline. The Mirror’s Edge racing game will be released on May 24.
A similar statement was echoed by CEO Andrew Wilson during their last call for earnings. Andrew also spoke about the upcoming Battlefield game release during the holiday season and Mass Effect Andromeda later in the year. The latter is a BioWare product. The first Mass Effect was released by Microsoft. However, EA bought BioWare and since then it has released Mass Effect 2 and 3 in the January-March quarter.
Battlefield 5 will end up being pitted against Call of Duty, which usually launches around November. Thus, postponing the release of Mass Effect Andromeda to the following calendar year will protect it from stiff competition. We don’t know much to officially release the game itself, except that one of the main characters in the game, Commander Shepard will no longer be a part of the story.
The stock is slightly overpriced
The next income report is due in 4 weeks. In terms of responding to market fluctuations, the stock has followed a similar path to many other tech companies over the past 3 months. The last trading session saw stock prices fall nearly 2% to close at $ 63.16. However, according to First call data compiled by Thomson-Reuters, analysts at the equity research companies have a consensus target of $ 82.53. This is a higher level than the 52 week high of $ 76.92.
As for EPS, these analysts predict that the next quarterly EPS will be $ 0.19 while for the year, it could reach $ 3.06. The current PEG ratio would be 1.18, making the stock slightly overvalued. When a company’s stock has a PEG ratio of 1, the stock is considered fair valued while a value greater than 1 is said to be overvalued.
On the other hand, 13 analysts polled by Zacks Research opted for an overall “buy” rating. On a 5-point scale where 1 or 2 suggests buying the stock, EA scored 1.21. Their target price consensus stands at $ 81.461, which is again slightly above the 52 week high. Among them, the more bearish view does not see the stock drop below $ 60 (which is actually higher than the 52 week low), while the more bullish view goes all the way to $ 95. A standard deviation of 7.687 was observed among the 13 analysts. As for EPS, their quarterly EPS forecast is $ 0.3. The last announced EPS was $ 0.03 compared to Zacks’ consensus estimate, leading to a surprise factor of 1.76%.