Goldman Sachs Reiterates Neutral Rating on Electronic Arts (EA)

Goldman Sachs analyst Eric Sheridan reiterated a Neutral rating and $170.00 price target on Electronic Arts (NASDAQ: EA)

The analyst comments: "On Friday, September 26th, media reports stated that a consortium of investors is currently examining a potential transaction that would take EA private at a $50bn valuation. At this enterprise valuation, EA shares would be valued at 17x our current FY 27 Adj EBITDA estimate – compared to the takeout multiples on FY 23 management estimates of Activision Blizzard (when acquired by Microsoft) of 17x. In our valuation work, we have presented an M&A valuation prong that utilizes 19x our NTM +1 estimate to arrive at a $58.2b enterprise value and have weighted that prong at 15% in our 12-month price target framework for EA. We make no determination on the likelihood of such a transaction coming to fruition and make no changes to our operating estimates or aggregate valuation work at this time.
Away from the reports of a transaction, we still expect the medium/long term fundamentals of EA to be centered on the operating performance of key titles in the coming 6-12 months (American football, EA FC/FC Mobile and the launch of Battlefield 6). Over the long-term on an operating performance basis, we see the key messages and operating guidance from the company’s Fall 2024 Investor Day as the primary guiding factor."

For an analyst ratings summary and ratings history on Electronic Arts click here. For more ratings news on Electronic Arts click here.

Shares of Electronic Arts closed at $193.35 yesterday.

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