Michael Pachter: Electronic Arts Will Be In-Line

According to analyst Michael Pachter at Wedbush Morgan, Electronic Arts (NASDAQ:ERTS) is going to deliver in-line earnings on Tuesday.

Here’s Pachter’s bullet points for his preview of Electronic Arts earnings:

  • EA will report Q3:11 (ending December) results after market close on Tuesday, February 1 with a conference call at 2:00pm PT (877-418-3422 passcode 37361642 or at http://investor.ea.com).
  • We expect Q3 results below our estimate for revenue of $1.44 billion and EPS of $0.62, but in line with consensus estimates for revenue of $1.44 billion and EPS of $0.57, and guidance for revenue of $1.375 — 1.5 billion and EPS of $0.50 — $0.60.
  • EA’s Q3 U.S. NPD retail sales tracked down 22% (compared to guidance of up 2 — 11%) due to sagging music sales, the cancellation of NBA Elite 11, poor sales for EA Sports MMA, and last year’s strong debuts for Left 4 Dead 2 and Dragon Age: Origins.
  • EA appears well positioned to grow earnings again in FY:12, and we expect management to provide visibility on the earnings call.
  • Maintaining our OUTPERFORM rating and our 12-month price target of $21.50, which reflects a multiple of 18x our FY:12 EPS estimate of $0.92/share, plus $5/share in cash.

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