WMS analyst Michael Pachter wrote in a note to investors that EA shares have been down nearly 15 percent over the last six weeks due to concerns that the company would report quarterly results below the market consensus of $1.272 billion in revenue.
EA’s guidance for the third quarter ended December 31 forecasts revenues of $1.2-$1.3 billion.Despite market uncertainty, Pachter said that EA is “not only highly likely to meet consensus estimates, but is highly likely to exceed such estimates.”The analyst said that EA is set to “modestly beat” WMS’ estimate of $1.3 billion in revenues for the quarter; the high-end of EA’s guidance. Contributions from mobile gaming arm JAMDAT and foreign currency transition gains are expected to bring Q3 sales to $1.31 billion.Pachter added, “We have been wrong before, but do not think that we are this time. We believe that even if EA’s December NPD results are $30 – 50 million below its results last year, the company can deliver revenues and earnings solidly within its guidance range by merely maintaining its reserves at historical levels. We would be surprised if EA were to report revenues below the consensus estimate while maintaining a record-high reserve, and do not expect the company to do so.”
Pachter expects EA to report its results on or around February 1, and research firm NPD Group is set to report December US videogame sales results on January 11.WMS maintains a “Strong Buy” rating for EA shares, which stand at $50.36.