July 19, 2024, was Christmas in July for fans of the Electronic Arts Inc. (NASDAQ: EA) college football franchise. For the first time in a decade, gamers had the opportunity to play as their favorite college football teams and players as EA Sports College Football 25 launched online.
During its early access period, which started on July 19, the game had 2.2 million unique players. By the time the company reported earnings on July 31, that number had reached over five million.
However, with EA stock up 9.9% in the last month and 10% in 2024, is all the momentum from this launch priced into the stock? Early price action would suggest that may be the case. After climbing 4.7% after the report, EA stock has returned most of those gains.
EA Issues Optimistic Guidance for Upcoming Quarter
On July 31, EA delivered its first quarter earnings report for its 2025 fiscal year. The company reported earnings per share (EPS) of 45 cents, which was above the consensus estimate of 41 cents. Revenue of $1.26 billion was also higher than the $1.22 billion that was forecast.
The company also issued guidance for the upcoming quarter for bookings ranging from $1.95 billion to $2.05 billion. At the midpoint, that’s higher than analysts’ estimates for $1.95 billion.
That has to be a little comforting to investors, as the coming quarters are supposed to reflect growth from its College Football title, the launch of Madden NFL 25 in August, and its soccer title FC 25 in September. Both titles have a rabid base of fans that will help drive bookings growth.
Growth Concerns for EA Are Keeping Analysts Cautious
However, investors may still be concerned about the success of the company’s non-sports games. Apex Legends, the latest addition to the company’s Apex franchise, has been reporting lower bookings.
Plus, while the company beat analysts’ estimates for the quarter, the top and bottom lines are still lower YoY, and not by just a little bit. Furthermore, even with the anticipated earnings growth for the remainder of its fiscal year, the company’s earnings will still be trailing YoY levels.
Is EA Stock a Good Value?
With a forward price-to-earnings (P/E) ratio of around 26x, EA stock is a good value compared to the broader software sector. However, technology stocks have been battered recently, and investors may need to see more before deciding if the stock offers a fair value.
The EA analyst ratings on MarketBeat show that nine analysts have raised their price targets on EA stock since the earnings report. The highest comes from TD Cowen, which gives the company a new price target of $184. However, the consensus price of $158.95 gives investors only about a 6.9% upside.
It’s also important to note that institutional buying has dried up after strong buying in the first quarter. That was likely in anticipation of the College Football release.
