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Electronic Arts Inc. (NASDAQ:EA) Mass Effect Andromeda Release Delayed

Electronic Arts Inc (NASDAQ:EA)

Electronic Arts Inc. (NASDAQ:EA)’s highly anticipated game Mass Effect Andromeda was announced at E3 2015. At that time, it was said that the game will be released in 2016’s holiday quarter. However, the launch has now been pushed back to early 2017 as per the CFO Blake Jorgensen.

Blake was speaking at the Morgan Stanley Technology, Media & Telecom Conference. He said that the game in question would release in the fourth quarter. For Electronic Arts, the fiscal year ends on March 31. This means that the game will launch sometime between January and March in 2017.

Electronic Arts Inc (NASDAQ:EA)

Electronic Arts Inc. Prepares for a Year of Revival

Blake acknowledged that Wall Street has high expectations from Electronic Arts this time, unlike the past years. Among other titles, the FPS Battlefield 5 will be released in the third quarter (meaning at the end of CY2016). Titanfall 2, another FPS game built by EA’s partner Respawn will see a similar timeline. The runner game Mirror’s Edge will be released as soon as the 24th of May.

A similar statement was echoed by CEO Andrew Wilson during their last earnings call. Andrew too talked about releasing the next Battlefield game in the holiday season and Mass Effect Andromeda later in the fiscal year. The latter is a BioWare product. The first Mass Effect was published by Microsoft. However, EA bought BioWare and since then, it has published Mass Effect 2 and 3 in the January to March quarter.

Battlefield 5 will end up being pitted against Call of Duty, which usually launches around November. Thus, pushing back Mass Effect Andromeda’s release to the next calendar year will shield it from some tough competition. Little is known to come out officially about the game itself, except for the fact that one of the lead characters of the game, Commander Shepard will no longer be a part of the story.

The Stock is Slightly Overvalued

The next earnings report is due 4 weeks from now. In terms of responding to market fluctuations, the stock has followed a similar path in the last 3 months as many other tech firms. The last trading session saw share prices dropping by nearly 2% to close at $63.16. However, as per First Call data compiled by Thomson-Reuters, analysts at equity research firms have a consensus target of $82.53. This is a higher level than the 52-week high of $76.92.

As for EPS, these analysts predict the next quarterly EPS to be $0.19 whereas for the year it could be as much as $3.06. The current PEG ratio is said to be 1.18, which makes the stock slightly overvalued. When a firm’s stock has a PEG ratio of 1, the stock is considered to be fairly valued whereas a value above 1 is said to be overvalued.

On the other hand, 13 analysts polled by Zacks Research have gone for a ‘buy’ rating overall. On a 5-point scale where 1 or 2 suggests buying the stock, EA got a rating of 1.21. Their target price consensus stands at $81.461, which is again slightly higher than the 52-week high. Out of them, the most bearish view does not see the stock dropping below $60 (which is actually higher than the 52-week low) whereas the most bullish view goes as far as $95. A standard deviation of 7.687 was seen among the 13 analysts. As for EPS, their quarterly EPS prediction is $0.3. The last EPS announced was $0.03 away from the Zacks consensus estimate, leading to a surprise factor of 1.76%.

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