Wedbush Morgan Ups Electronic Arts to Strong Buy
Wedbush Morgan upgraded Electronic Arts (ERTS) to strong buy from buy, explaining that the company's guidance has substantial upside.
Analyst Michael Pachter says the company's recent release, 2006 FIFA World Cup, has sold well heading into the World Cup (starting June 9). He says Electronic Arts' April US retail sales rose 50%, compared with guidance for total revenue down 7% to 18%. He believes management was conservative with fiscal year 2007 (ending March) guidance. Should the company consistently deliver upside, he expects it to have earnings per share expansion over the next six months. He views next generation console launches for Wii (fourth quarter) and PS3 (ending November) as catalysts. He has a $60 stock price target.