On Thursday, Citi maintained a Neutral rating on Electronic Arts (NASDAQ:EA) but slightly increased the price target from $162.00 to $163.00. The adjustment came after Electronic Arts reported financial results for the second fiscal quarter of 2025 (F2Q25) that surpassed Wall Street's expectations.
Electronic Arts announced net bookings and non-GAAP EPS that exceeded analyst predictions, prompting the company to raise its full-year guidance for both metrics. In response, Citi analyst updated their model to reflect the latest results and outlook, resulting in a marginal increase in the price target to $163.
The updated price target is based on approximately 19 times the firm's fiscal year 2026 non-GAAP EPS estimate, combined with an estimated $6 of net cash per share. Despite the positive results and raised guidance from Electronic Arts, Citi's stance on the stock remains unchanged at Neutral.
The reported F2Q25 earnings highlight Electronic Arts’ ability to outperform market expectations, which has led to an improved forecast for the company's financial year. The new price target indicates a modest expectation of growth, aligning with the firm's conservative outlook on the stock's future performance.
In other recent news, Electronic Arts Inc . (NASDAQ:EA) reported a record-breaking second quarter for the fiscal year 2025, with net bookings reaching $2.08 billion, a 14% increase from the previous year. This surge was largely driven by EA's sports franchises, including EA SPORTS College Football 25. In light of these robust results, EA has raised its full-year guidance and announced strategic initiatives to enhance online communities and leverage generative AI.
Player engagement has seen substantial growth, with the number of American Football players more than doubling and total hours played increasing by over 140%. EA SPORTS FC has become the largest franchise in the Western world, experiencing a 130% rise in players. However, the monetization of Apex Legends did not meet the company's expectations.
EA anticipates continued growth with a Q3 net bookings forecast of $2.4 billion to $2.55 billion. The company plans to expand The Sims as a platform and collaborate with Amazon (NASDAQ:AMZN) MGM Studios for a film adaptation. EA's CEO, Andrew Wilson, expressed confidence in the breakout potential of the upcoming title "Veilguard." These are among the recent developments in EA's strategic journey.
InvestingPro Insights
Electronic Arts' recent financial performance aligns with several key metrics and insights from InvestingPro. The company's market capitalization stands at $39.86 billion, reflecting its significant position in the gaming industry. EA's P/E ratio of 38.49 and adjusted P/E ratio of 33.36 for the last twelve months as of Q2 2025 indicate that investors are willing to pay a premium for the company's earnings, which is consistent with Citi's valuation approach of 19 times fiscal year 2026 non-GAAP EPS.
InvestingPro Tips highlight that EA has raised its dividend for 4 consecutive years, demonstrating a commitment to shareholder returns. This is particularly noteworthy given the company's strong financial position, as another tip points out that EA holds more cash than debt on its balance sheet. These factors contribute to the stock's resilience, with InvestingPro noting that it generally trades with low price volatility.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for Electronic Arts, providing a deeper understanding of the company's financial health and market position.
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