Option Trade 
Electronic Arts Inc. (NASDAQ:EA) Calls 
Wednesday, 10 February, 2016

**OPTION TRADE: Buy the EA Jun 2016 60.000 call (EA160617C00060000) at approximately $4.50. Place a pre-determined sell at $9.00.

Note: No protective stop losses added -- but if you wish to do so make it $1.80.

by Ian Harvey

February 10, 2016

Electronic Arts Inc. (NASDAQ: EA), a game software content and services provider, received an upgrade from Wall Street analysts on Tuesday.

Hilliard Lyons analyst, Jeffrey Thomison, bumped the rating from Neutral to Buy. The company’s stock has declined roughly 15% since the start of this year.

Mr. Thomison believes that the gaming publisher’s shares look attractive at current levels. He added that the EA’s fundamentals are still growing strong, and described the company as a high-quality operator, which has strong portfolio. The analyst’s 12-month target price on the stock is $67.

Similar to Hilliard Lyons, Cowen and Jefferies also recommended investors to take advantage of the current weakness by building long positions. Cowen analysts believe that EA’s guidance would prove conservative, and pointed out that visibility into the company’s new releases has increased considerably.

Jefferies analyst Brian Pitz highlighted that the unit sales for Star Wars Battlefront game came in above the company’s 13-million unit estimate. He also noted that the game’s overall sales were more in terms of physical discs, instead of downloads, which are more profitable. For the current year, the analyst thinks that Battlefield is the game to watch. Mr. Pitz has a $95 price objective on EA shares.

After the rating announcement the stock managed to end the day up 3.43%.

Electronic Arts Inc. now has a 50-day SMA is $66.91 and 200-day SMA is $67.70, and it has a 52-week high of $76.92 and a 52-week low of $53.01.

EA's Future Plans

Unravel launches on February 9...On February 23, Plants vs. Zombies: Garden Warfare 2 goes live...Then on March 15... EA SPORTS UFC 2 set to debut...Looking ahead to [fiscal year 2017, which ends March 2017], introducing breakthrough games from some of their biggest and most popular franchises.... Mirror's Edge Catalyst...in May. A great line-up of EA SPORTS titles are in development...An all-new Battlefield game...will arrive in time for the holidays, also a new Titanfall experience coming...and... Mass Effect: Andromeda...will launch later in the fiscal year.

Electronic Arts' participates in almost all aspects of the video game industry, selling titles on virtually every platform, including PCs and mobile devices. But Electronic Arts remains dependent on the market for video game consoles -- a full 76% of Electronic Arts' adjusted revenue came from the sale of its games on the PlayStation 3, Xbox 360, PlayStation 4, and Xbox One. The later two were particularly important, generating about two-thirds of Electronic Arts' adjusted revenue. Fortunately, they're quite popular.

Electronic Arts sold 13 million copies of Star Wars: Battlefront into the sales channel last quarter. Although those players have already given Electronic Arts' some money for the game itself, they offer additional monetization opportunities through the sale of post-release, add-on digital content.

Out of 17 analysts covering Electronic Arts, 16 rate it “Buy”, 0 “Sell”, while 5 “Hold”. $95 is the highest target while $72 is the lowest. The $82.85 average target is 39.71% above Monday’s stock price.

Also, Mizuho maintained EA with “Buy” rating and $84 target price. Bank of America upgraded the shares of EA to “Buy” rating. Stifel Nicolaus maintained the firm’s “Buy” rating and an $81 price target. Finally, Oppenheimer initiated the stock with “Outperform” rating.

Harvey’s Options Volatility Indicator

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

**OPTION TRADE: Buy the EA Jun 2016 60.000 call (EA160617C00060000) at approximately $4.50. Place a pre-determined sell at $9.00.

Note: No protective stop losses added -- but if you wish to do so make it $1.80.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.

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