Sterne Agee Reiterates Electronic Arts Buy (ERTS)

Sterne Agee reiterated its Electronic Arts ERTS Buy rating in a research report published today. Sterne Agee has previously given Electronic Arts shares a $21 price target. In the report, Sterne Agee states, "EA reported in-line results. However, the mix of revenue was more favorable with digital revenue accelerating to +39% from +35% in the first half of FY11. In a first in a very long time, management announced a $600M stock buyback program, which is to be completed over the next 18 months. (There is $2B or $6 per share in cash/marketable securities on the balance sheet and the company is cash flow positive.) Full- year FY11 revenue guidance was lowered slightly (~1%) due to lower catalog sales while EPS guidance was unchanged at the midpoint. Management again emphasized that the underlying video game industry trends are healthier than the headlines imply and that NPD-type retail data fail to capture the high growth in digital revenue." Shares of Electronic Arts were at $17.25 at the time of posting in pre-market trading, up 10.44% from Tuesday's market close.