Last Update27 Aug 25Fair value Increased 1.05%
Upward revisions to Electronic Arts’ price target reflect much stronger-than-expected player engagement around Battlefield 6’s open beta, supportive legal developments improving digital distribution profitability, and dismissal of short-term negative feedback, resulting in a modest increase in consensus analyst fair value from $172.30 to $174.11.
Analyst Commentary
- Bullish analysts sharply raised Battlefield 6 open beta player base estimates, expecting nearly 20 million participants versus prior forecasts of just over 5 million, indicating a much stronger franchise draw.
- Broadly positive community sentiment and high server demand for Battlefield 6’s open beta point to robust user engagement, outweighing minor criticisms focused on a single game mode.
- Analysis of proprietary console and Steam data flagged the Battlefield 6 beta launch as a major success, bolstering optimism for Electronic Arts’ fiscal 2026 performance.
- A federal court ruling denying Apple's stay in the Epic case is expected to allow app developers—including EA—to offer alternative payment methods in U.S. app stores with no commissions, structurally improving digital distribution economics for at least the next two years.
- Bearish analysts’ concerns around short-term negative feedback were dismissed, with most deeming the impact immaterial to Battlefield 6’s overall positive market reception.
What's in the News
- EA's flagship "EA Sports FC 25" remains the overall best-selling game in Europe for 2025 to date, while its new release "Split Fiction" was surpassed by Ubisoft's "Assassin's Creed Shadows" as the top-selling new game (The Game Business).
- Major sports titles have launched or been announced, including "EA SPORTS Madden NFL 26" (with advanced AI and expanded gameplay features), "EA SPORTS NHL 26" (featuring real NHL EDGE data for authentic play), and "EA SPORTS College Football 26" (emphasizing immersive game modes and new music partnerships) (Company Announcements).
- "Battlefield 6" was unveiled with significant enhancements to gameplay, new multiplayer and single player modes, and launches October 10, 2025; the creative Portal mode returns with more power for user-generated content (Company Announcements).
- A new entry in the "skate." franchise will enter Early Access on September 16, 2025, across PlayStation, Xbox, and PC, emphasizing cross-platform accessibility and community feedback; frequent seasonal updates and content expansions are planned (Company Announcements).
- Electronic Arts completed a $375 million share buyback in Q2 2025 (cumulative $2.7 billion, 7.44% of shares repurchased) and reaffirmed FY26 earnings guidance with projected annual revenue of $7.1–$7.5 billion and net income of $795–$974 million (Buyback Update, Corporate Guidance).
Valuation Changes
Summary of Valuation Changes for Electronic Arts
- The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from $172.30 to $174.11.
- The Future P/E for Electronic Arts remained effectively unchanged, moving only marginally from 31.25x to 31.57x.
- The Discount Rate for Electronic Arts remained effectively unchanged, moving only marginally from 9.13% to 9.12%.
Key Takeaways
- Strategic focus on live services and new games, leveraging events like the World Cup, aims to boost revenue and player engagement.
- AI integration and disciplined cost management are expected to enhance efficiency, profitability, and earnings growth.
- Revenue challenges stem from underperforming IPs, shifting portfolio focus, and macroeconomic pressures impacting consumer spending and live services growth.
Catalysts
About Electronic Arts- Develops, markets, publishes, and delivers games, content, and services for game consoles, PCs, mobile phones, and tablets worldwide.
- EA's strategic focus on expanding live services and new game launches, such as Skate and Battlefield, is expected to drive revenue growth and foster player engagement.
- The relaunch of American Football and continued success of FC Mobile, particularly in fast-growing markets, are expected to significantly boost net bookings and player base.
- EA plans to leverage the 2026 World Cup as a major acquisition opportunity for its global football franchise, likely increasing net bookings and player engagement across platforms.
- Integration of AI in game development for deeper, more personalized experiences is expected to enhance operating efficiencies and potentially improve net margins.
- Ongoing share repurchase programs and disciplined operating expense management signal potential for earnings and margin expansion, supporting EPS growth.
Electronic Arts Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Electronic Arts's revenue will grow by 4.8% annually over the next 3 years.
- Analysts assume that profit margins will increase from 13.9% today to 18.1% in 3 years time.
- Analysts expect earnings to reach $1.6 billion (and earnings per share of $6.55) by about August 2028, up from $1.0 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $1.8 billion in earnings, and the most bearish expecting $1.3 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 31.6x on those 2028 earnings, down from 41.4x today. This future PE is lower than the current PE for the US Entertainment industry at 36.4x.
- Analysts expect the number of shares outstanding to decline by 4.6% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 9.12%, as per the Simply Wall St company report.
Electronic Arts Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The decline in net bookings for FY '25, particularly influenced by factors like softness in Apex Legends and the negative impact of slate timing, reflects potential vulnerabilities in EA's revenue stream from underperforming IPs.
- The projected 40% year-over-year decline in Apex Legends net bookings could significantly impact EA's live services revenue, which forms a substantial part of overall earnings.
- Concerns over macroeconomic conditions and their possible effects on consumer spending, particularly in discretionary categories such as gaming, pose risks to EA's future revenue growth and profitability.
- The ongoing structural transition in EA's portfolio, shifting away from traditional full-game sales towards live services and blockbuster storytelling also indicates potential challenges in maintaining revenue consistency during this period.
- Despite attempts to rejuvenate the FC franchise, challenges related to player migration from older titles to new releases highlight a risk to EA's future growth in terms of player engagement and monetization.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $174.112 for Electronic Arts based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $210.0, and the most bearish reporting a price target of just $148.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $8.6 billion, earnings will come to $1.6 billion, and it would be trading on a PE ratio of 31.6x, assuming you use a discount rate of 9.1%.
- Given the current share price of $172.23, the analyst price target of $174.11 is 1.1% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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