Strong 'Apex' Release Continues To Boost EA Shares, Sell-Side Has Mixed Reaction

Electronic Arts Inc. EA is enjoying a strong rebound thanks to a successful launch of its new "Apex Legends" battle royale game with hopes of competing with "Fortnite." But analysts had mixed opinions Monday on if and how much the game will boost EA investors’ fortunes.

Gaming industry enthusiasts are excited about the free-to-play "Apex Legends" games, which brought in 1 million players in its first eight hours and 10 million in just three days. The company hopes the game may finally be the one that challenges the massively successful "Fortnite" for player eyeballs. And investors seem to think it's good news, with EA stock moving higher Monday. 

While still in the shadow of the 200-million player base of "Fortnite," analysts pointed out that "Apex" reached the 10-million mark faster.

EA shares rebounded on Friday, gaining more than 15 percent to claw back losses it saw earlier after a disappointing earnings release.

The Analysts

Bank of America Merrill Lynch’s Justin Post upgraded EA to Buy from Neutral and raised the price objective from $95 to $110.

Buckingham Research Group’s Matthew Harrigan downgraded EA from Buy to Neutral and raised the price target from $90 to $103.

Tigress Financial’s Ivan Feinseth said in a note to investors that it is “too early to call a turn” on EA.

BofA 

Early reviews of the game have been positive and suggest staying power, Post said, suggesting a possible upside of 80 million eventual users for "Apex Legends" that would boost EA revenue by about $600 million. It still seems unlikely that "Apex" will replace "Fortnite" as the category leader, and any call on the game's ultimate meaning to the value of the stock is highly speculative, he said. 

Buckingham

Buckingham raised its price target due to the success of "Apex Legends" in its first week and praised early marketing that raised the game’s buzz in the gaming world. But it is "premature to assume that 'Apex Legends' achieves economics," Harrigan said. 

Tigress Financial

Feinseth said the success of one game isn’t enough to become more bullish on EA.

Price Action

EA shares were up 6.09 percent at $103.54 at the time of publication Monday. 

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Photo courtesy of EA.