Following a visit to Electronic Arts for its annual Analyst Day, several analysts from Lazard, Wedbush Morgan, Opco and Stern Agee have come away bullish on the publisher, which says it can reach sales of $6 billion in 2011 on the strength of its IP slate.
"While EA has struggled under the weight of a costly console transition," said Lazard's Colin Sebastian, "we believe the stage is set for solid growth and margin expansion driven by a strong product portfolio, cost efficiencies, and early leadership positions in high-margin digital/online segments."
Wedbush Morgan's Michael Pachter said that the publisher actually stands to "actually exceed" its expectations: "In order to achieve $6 billion in revenues (consisting of $5.1 billion in packaged goods sales and $900 million in digital revenue), the company must grow its packaged goods business by only 12% per year, and must grow its digital revenues by $575 million. We believe that it can easily achieve these goals."
Opco's Shawn Milne has said that its the digital revenue growth where EA needs to focus, saying "we believe EA needs to deliver stronger growth in mobile revenues given lackluster growth in the N.A. wireless market."
He added, though, that the company's ramp in Pogo.com, it's Hasbro licenses like Monopoly, Scrabble, and a newly announced Littlest Pet Shop community, as well as its new
Warhammer MMO should drive online sales up by more than 40 percent in the coming fiscal year.
EA didn't provide guidance for fiscal 2009 during the course of the day, but Pachter said Wedbush expects management to maintain a conservative approach when it likely provides it in May. Sebastian added, too, that "we believe that the positive impact of leverage in the model is likely to be weighted towards the 'out years' of the cycle."
