Even before it has rolled out the next Madden NFL or its first Star Wars game, Electronic Arts is having a gigantic year.
The publisher is back on top of the world after a rough decade, and its stock price is now trading at an all-time high. You can buy a share of EA for around $71.63, according to Google Finance. That is up 54 percent from the $46.57 the stock was trading at in early January of this year. That’s also up significantly from EA’s previous lifetime high price of $68.12 way back in February 2005. With the global gaming market fast approaching $100 billion, EA is one of the companies positioned to capitalize on all of the industry’s most lucrative sectors.
EA can credit its surge to the revised strategies it put in place after it ousted its previous chief executive officer, John Riccitiello, in March 2013. The publisher spent several months choosing a replacement, but during that time, it significantly cut jobs and focused on keeping costs down in all of its departments. It also shifted from a premium-price model on mobile to one that embraces free-to-play and in-app purchases.
And the market has really taken notice. EA has flirted with reaching a new all-time high price for its stock for a few weeks now, but a note to investors from analyst Eric J. Sheridan with Wall Street firm UBS pushed it over the edge. Sheridan argues that the company’s shift toward digital and mobile while keeping costs down will help it outperform expectations for the foreseeable future.
Sheridan also expects EA’s big holiday release, the first-person multiplayer shooter Star Wars: Battlefront, to sell like crazy. The game goes on sale one month before Star Wars: The Force Awakens hits theaters, which should help the game — which we loved when we tried it last month — find a massive audience. While EA is estimating it will sell between 9 million and 10 million copies of Battlefront, the analyst says he is predicting sales closer to between 12 million and 14 million.
With all of that in mind, UBS raised its rating of the EA stock to a “buy.” That’s because it thinks it is underpriced — even at its current $71.62 — because it values the share price at around $80.
For all of EA’s fiscal 2016, UBS is predicting the company will generate $4.63 billion in revenue. That’s up from its previous prediction of $4.48 billion. Similarly, it expects the coming now to earn around $1.5 billion, which is up from $1.43 billion.
If it hits those marks, EA will likely have an easier time reaching that $80 share-price target.