Electronic Arts (NASDAQ: EA) shares drew fresh attention after reports of a possible $50 billion take-private deal valued the company at 17 times adjusted EBITDA, echoing Microsoft's (NASDAQ: MSFT) Activision Blizzard acquisition multiple.
Despite buyout speculation, EA's stock outlook still hinges on the performance of its major franchises. Madden, EA Sports Football Club, and Battlefield are integral to its long-term strategy.
Goldman Sachs analyst Eric Sheridan maintained a Neutral rating on EA with a price forecast of $170.
Also Read: Leading Game Maker EA Gets Acquired In Largest All-Cash Take-Private Deal
A potential take-private deal for Electronic Arts gives it a value that’s 17 times its fiscal 2027 adjusted EBITDA estimate. Sheridan compared that multiple with the 17 times multiple applied to Activision Blizzard when Microsoft acquired it.
Sheridan includes an M&A scenario using a 19 times multiple on his next twelve months plus one-year estimate. This implies an enterprise value of $58.2 billion. The analyst assigns a 15% weight to this M&A prong within his 12-month price forecast for EA.
Despite the media reports, Sheridan made no changes to his operating estimates, valuation work, or assumptions about the likelihood of a deal.
He emphasized that EA's medium- to long-term fundamentals will continue to depend on the performance of key franchises over the next 6–12 months, including American football, EA FC/FC Mobile, and the launch of Battlefield 6.
Over a longer horizon, he pointed to management's Fall 2024 Investor Day as the main guidepost for strategy and growth expectations.
Sheridan’s valuation blends fundamental analysis (85% weight) and M&A scenarios (15% weight).
Sheridan isn’t the only analyst examining EA this week. Wedbush analyst Alicia Reese downgraded the company from Outperform to Neutral. She also lowered her price target from $210 to $200.
The upcoming release of Battlefield 6 is driving the company’s shares higher in recent months, Reese said in the downgrade note.
EA Price Action: Electronic Arts shares were up 4.81% at $202.63 at the time of publication on Monday.
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