Why Battlefield 6 is driving EA stock higher

Jacob Wolinsky ValueWalk

There is a lot of excitement around the latest Electronic Arts video game.

Shares of Electronic Arts (NASDAQ: EA), better known EA, are on the move, rising more than 5% higher on Monday and jumping some 10% since last week.

The catalyst for the leading video game company seems to be the buzz around its new offering, Battlefield 6, which was beta tested over the weekend. Battlefield 6 is the latest version of the Battlefield video game series, a multiplayer, first-person shooter game.

Battlefield 6 is slated to come out on October 10, but over the past weekend, the company offered players a sneak peek with the series biggest open beta ever. The beta ran from August 9 and 10 and it will run again from August 17-20.

The response to the first weekend’s rollout was overwhelming, according to various reports. Tom’s Hardware called it a “dream rollout” with more than 521,000 concurrent players at its peak on Sunday. According to Tom’s Hardware, those are the best numbers for any of the Battlefield games, including the most recent version, Battlefield 2042, which had 150,000 concurrent users at its peak during its beta in 2021.

Analyst upgrades EA stock on Battlefield 6 beta

The excitement around the open beta was not lost on analysts at DA Davidson, which boosted EA’s price target by $10 to $160 per share on Monday. Now, the share price has already blown past $160 per share, trading at around $176 per share at the close on Monday. But the improved outlook was due to the open beta results.

DA Davidson analysts wrote in a research note, per the Fly, that there was a constant queue to join the server every time an analyst logged on over the weekend. Also, the stream data DA Davidson gathered over the weekend confirmed the success of the open beta. DA Davidson maintains a neutral outlook on EA stock, but analysts at the firm are more positive about its prospects for the fiscal year due to the promise of the open beta, according to the Fly.

Electronic Arts stock also got a slew of upgrades last week after the company released strong fiscal first quarter earnings. Revenue of $1.67 billion in the quarter and earnings of 79 cents per share both beat analysts’ estimates. Net bookings, a key metric that tracks products and services sold, rose 3.2% in the quarter to $1.3 billion.

Further, it maintained its guidance for the full fiscal year, calling for revenue of $7.1 billion to $7.5 billion, earnings of $3.09 to $3.79 per share, and net bookings of $7.6 billion to 8.0 billion.

Several price target upgrades

The earnings results led to several price target increases, including, most notably, Arete, which boosted its target to $192 per share with a buy rating. Also, EA stock got $2 price target raises from both Baird, to $170 per share, and Bank of America, to $168 per share.

The median price target is currently $170 per share, which EA stock blew past on Monday. But given the open beta rollout, set to continue this weekend, it wouldn’t be a shock to see more analysts weigh in with more bullish outlooks.

The stock is already up 21% year-to-date with a reasonable forward P/E of 20, so it will be interesting to see if it has more room to run. Its definitely one to keep an eye on.

Author

Jacob Wolinsky

ValueWalk

Jacob Wolinsky is the founder of ValueWalk, a popular investment site. Prior to founding ValueWalk, Jacob worked as an equity analyst for value research firm and as a freelance writer. He lives in Passaic New Jersey with his wife and four children.

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