EA faces a number of critical multi-year decision points, according to Robert W. Baird & Co analyst Colin Sebastian.
According to his latest investor’s note, Sebastian said his firm is adjusting EA’s estimates to account for potential “near-term catalysts for shares,” partly due to the next Xbox announcement which is expected in May – which VG247 has heard as well through various Internet rumblings.
Other factors such as E3, annual EA Sports releases, and a new CEO for EA has caused the firm to raise its price target for EA to $19 from $15.
However, Sebastian feels the CEO decision made by EA will “set the tone for the next 5+ years.”
“While EA has generally fallen short of shareholder expectations over the past several years, the company has an opportunity during this transition year to reenergize the developer base, build further leadership positions on mobile and online platforms, and exercise greater financial discipline,” he wrote.
“Beyond hiring a CEO with proven leadership capabilities in both technology and entertainment, we see the levers to drive-out performance coming from the company’s strong brands, large customer base, healthy balance sheet, and broad distribution capabilities.”
The investment firm as lowered its FY14 estimates to account for lower catalog sales of Dead Space 3 and Crysis 3, and FY14 revenues and EPS of $4.15 billion and $1.10 vs. prior estimates of $4.25 billion and $1.15, respectively, and significantly weighted to the second half of the year.
The firm also noted that the GDC preview of EA’s key December release Battlefield 4 and the Frostbite 3 engine was “received positively.”
Sebastian also called next-gen platforms “high-end PCs in console clothes,” and that EA’s “strong PC game pedigree” should be an advantage in the new cycle, despite the console market continuing “to narrow towards the high end gamer.”