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Author: Alan LittleDate: 2020-11-09

Electronic Arts (EA) 7% lower, Take-Two (TTWO) up 4% after Q2 reports

Electronic Arts (EA) slumped 7% on Friday after the video game developer delivered a “mixed” corporate report, while competitor Take-Two Interactive (TTWO) made gains after posting a 37% spike in earnings.

EA, producer of the annual FIFA football franchise, said that its fiscal Q2 revenue came in at $1.15bn, which was 15% down from a year earlier, and followed up with cautious guidance for Q3.

Take-Two, publisher of Grand Theft Auto and Red Dead Redemption, fared better with $1.93 earnings per share and $950.5m revenue, versus the $1.48 and $856.5m Wall Street consensus.

Take-Two chief executive Strauss Zelnick said that the performance “was spectacular across the board”, as its flagship video games titles prospered and accounted for 61% of net bookings for the period.

Barclays analyst Mario Lu was also impressed after adding $14 to a new $210 price target and reiterating an overweight rating.

However, Piper Sandler lowered its price to $186 after claiming that the company’s recent slate of releases “had been sparse”, though the strength of the Grand Theft Auto and NBA 2K franchises had offset weaknesses.

Take-Two shares traded in positive territory on Friday after the report.

TTWO stock hit an intraday high at just after 12pm ET on the Nasdaq, before declining slightly to close 3.86% higher at $175.19.

EA struggled after Piper Sandler shaved $24 off a new $144 price target and pivoted to a lower neutral rating on an outlook that “did little to inspire”.

EA went into the red after the opening bell and eventually finished down 7.12% at $199.19.

There could be value at that price point though according to JPMorgan analyst Alexia Quadrani, who said that investors might want to enter the market after the sell-off.

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