Opinions Stan Wong
Electronic Arts IncEATOP PICKDec 03, 2015
Stan WongStock price when the opinion was issued
As of Jun 05, 2026. Market Open.
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Has a lot of sports franchises, lacking a single hit videogame. He likes its predictability. It has been offered a buyout, and will likely conclude the deal in Q2.
Martin Cobb, ASIP(Note the short timeframe.) Takeover bid of $210, which should settle in Q2.
Martin Cobb, ASIPThe space is doing fantastically well. Great franchises, an absolute money machine. There's a rule to buy software companies when growth + margins = 40 or more. For EA, this number is 94. July 29 report beat on top and bottom and raised guidance.
Kim Bolton(Note the short timeframe.) Chose it as a Top Pick because the price was depressed. The most utility-like of the video game companies. Weak on the mobile side. At some point, will probably be taken over, and at a premium.
Martin Cobb, ASIPThey have a lot of sports titles. They lost FIFA, but have their own soccer franchise, plus baseball and basketball. Sports are steady as opposed to companies depending on a few hit games. Ultimately, someone will buy them out, like Netflix or Amazon or Apple, who could pay twice the multiple.
Martin Cobb, ASIPLikes the portfolio, though a bit weak in mobile. Discretionary spend on some titles has been a bit lower. Over the long term, can grow 5-6%. 30% free cashflow margins, enough to buy back 5-6% of shares every year. In-game transactions are 99% gross margins. Yield is 0.6%.
(Analysts’ price target is $146.38)Martin Cobb, ASIP
This pick results from his looking at the application layer 12 months down the road. Model training algorithms are already being monetized in healthcare, education, and now sports/entertainment. Investor day last week saw a lot of AI tools. Yield is 0.5%.
12-month price target of $167.50. Buy 1/3 here around $141, $134, and $125.
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They produce entertainment software for PCs, tablets and home video game consoles. Have done very well because the industry is moving from the physical console gaming to more of the digital gaming space. Mobile gaming revenues should continue to climb as consumers continue to buy and spend more on smart phones and tablets. This has done very well by having fewer types of titles out, rather than “60 something” titles. They are really focused on quality control. Has a partnership with Disney to produce games that are based on Star Wars. Trading at 21X forward earnings with a 14%-15% growth rate.