Electronic Arts Inc. (NASDAQ:EA) is set to report its fiscal fourth-quarter (F4Q) earnings on May 7 after the market closes. With the gaming landscape facing macroeconomic headwinds and specific challenges, EA’s upcoming earnings are approached with moderated expectations.

EA Analysts’ Overview: Oppenheimer analysts Martin Yang, CFA, and Andrew Northcutt continue to rate EA as Outperform with a price target of $150.

Despite current market challenges, they believe EA’s valuation provides decent downside protection.

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Moderated Expectations: The analysts have adjusted their outlook, anticipating EA’s performance to align with conservative guidance due to softer live service bookings and a leaner release slate.

“We see investor sentiment as neutral to slightly negative into EA’s F4Q24 earnings,” Martin Yang noted, attributing the sentiment to the subdued macro outlook on the console game market and performance issues in titles like Apex Legends.

Strategic Overview:

• Game Releases: EA plans to bolster its portfolio with highly anticipated titles such as College Football, Need for Speed, and Dragon Age Dreadwolf.
• Digital and Mobile Growth: Continued expansion in digital sales and mobile gaming platforms is expected, leveraging strong franchises and new content.
• Hardware Sales: The company also anticipates a rebound in gaming hardware sales as next-generation consoles gain traction.

Revenue and Profit Outlook:

• Revenue Streams: Although live services are experiencing slower growth, EA’s digital segment is expected to maintain its expansion, supported by ongoing user engagement.
• Margin Expansion: Improvements in game development and marketing efficiency are likely to enhance margins.

Investor Catalysts: The analysts highlight several factors that could positively influence investor sentiment:

• New game launches and a strategic focus on digital transformation are expected to reinforce EA’s market position.
• Potential small-scale mergers and acquisitions are viewed as opportunities for strategic growth and innovation.

Looking Ahead: For the F4Q report, Yang and Northcutt predict a cautious yet strategic approach, with discussions on new initiatives likely during the earnings call, especially relating to EA’s digital and mobile strategies.

Market Position: “With a clearer catalyst path into C2H24, we view EA as a better buy than Take-Two Interactive Software Inc (NASDAQ:TTWO), in the near term,” the analysts said.

EA Price Action: Electronic Arts stock was trading at $127.50 at the time of publication, up 0.32% in the past 24 hours, according to Benzinga Pro.

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Image credits: Sergei Elagin on Shutterstock.