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EA

Electronic Arts

$106.42

0.88 (0.83%)

, DIS

Disney

$110.92

0.35 (0.32%)

14:16
12/15/17
12/15
14:16
12/15/17
14:16

For The Win: Can 'Last Jedi' boost 'Battlefront 2' sales?

Welcome to "For The Win," The Fly's weekly recap of the stories powering up or beating down video game stocks. EA HOPES FOR 'STAR WARS' BOOST: On Tuesday, Goldman Sachs analyst Christopher Merwin downgraded Electronic Arts (EA) to Buy from Conviction Buy to reflect fewer near-term catalysts around in-game monetization of non-sports titles. The analyst noted that since being added to Goldman's Conviction List on September 8, EA shares are down roughly 9%, largely due to an execution misstep around the implementation of in-game monetization in "Star Wars Battlefront 2." Meanwhile, Dan Gallagher wrote in the Wall Street Journal's "Heard on the Street" column that EA may be hoping that the release of Disney's (DIS) "Star Wars: The Last Jedi" will boost sales for "Battlefront 2." The game sold 900,000 copies through retail locations in the first two weeks of sale, a 49% dip from initial retail sales of the first "Battlefront" game, Gallagher noted. GOLDMAN UPS ACTIVISION TO BUY: On the other side of the coin, Goldman's Merwin upgraded Activition Blizzard (ATVI) to Buy from Neutral and raised his price target on the shares to $73 from $67. Merwin said he recommends owning this discounted "high-quality" asset ahead of accelerating earnings growth over the next 2-3 years. The analyst raised his 2019 and 2020 estimates as well to reflect a robust pipeline of games including "Diablo," "Overwatch 2," and a Blizzard mobile title. SWITCH SALES REACH 10M: On the hardware front, Nintendo (NTDOY) said earlier this week that its Switch system has already sold 10M units worldwide, despite launching in March, a month "not usually reserved for home console launches." For comparison, the Wii U, Nintendo's previous home console, has sold just 13.56M units total since its November 2012 launch, according to the company's IR site.

EA

Electronic Arts

$106.42

0.88 (0.83%)

DIS

Disney

$110.92

0.35 (0.32%)

ATVI

Activision Blizzard

$65.03

0.43 (0.67%)

NTDOY

Nintendo

$47.78

-0.95 (-1.95%)

  • 15

    Dec

  • 30

    Jan

EA Electronic Arts
$106.42

0.88 (0.83%)

12/12/17
12/12/17
DOWNGRADE

On The Fly: Top five analyst downgrades
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. Juno Therapeutics (JUNO) downgraded to Market Perform from Outperform at Wells Fargo, with analyst Jim Birchenough saying that while data for JCAR017 continue to support a potential best-in-class profile in aggressive lymphoma, the current valuation already reflects dominant market positioning over Gilead's (GILD) Yescarta. 2. General Dynamics (GD) downgraded to Underweight from Neutral at JPMorgan, with analyst Seth Seifman saying Gulfstream questions are unlikely to be resolved in the near term. Demand for G500/600 is ok for now, but uncertainty about ultimate production levels and the pace of the learning curve mean the transition will remain a near term overhang, the analyst said. Seifman also downgraded Raytheon (RTN) to Neutral from Underweight. 3. Adobe (ADBE), Barracuda (CUDA), GoDaddy (GDDY), Fortinet (FTNT) and Check Point (CHKP) downgraded to Neutral from Overweight and CoStar Group (CSGP), Imperva (IMPV) and Monotype Imaging (TYPE) downgraded to Underweight from Overweight at JPMorgan by analyst Sterling Auty in conjunction with his 2018 annual outlook for Software Technology. The analyst does not expect the "exceptional performance" in Software during 2017 to repeat in 2018. 4. Spark Therapeutics (ONCE) downgraded to Neutral from Buy at UBS, with analyst Carter Gould seeing a "challenging setup" for the shares after the Phase 1/2 SPK-8011 data in hemophilia A fell short of expectations. The analyst removed SPK-8011, or $29 per share, and early-stage pipeline value, or $12 per share, from his model. He finds it difficult to be more constructive on Spark shares in the near-term. 5. Electronic Arts (EA) downgraded to Buy from Conviction Buy at Goldman Sachs by analyst Christopher Merwin to reflect fewer near-term catalysts around in-game monetization of non-sports titles. To see The Fly's full Street Research coverage, click here.
12/12/17
GSCO
12/12/17
DOWNGRADE
GSCO
Buy
Electronic Arts downgraded to Buy from Conviction Buy at Goldman Sachs
Goldman analyst Christopher Merwin removed Electronic Arts from the Conviction Buy List to reflect fewer near-term catalysts around in-game monetization of non-sports titles. The analyst maintains a Buy rating and $136 price target.
12/08/17
PIPR
12/08/17
NO CHANGE
PIPR
November NPD video game software sales rose 9%, says Piper Jaffray
Piper Jaffray analyst Michael Olson notes that November NPD video game software sales were up 9% year-over-year, driven by strong growth for Call of Duty: WWII and Assassin's Creed Origins, offsetting Star Wars Battlefront II, which was down versus the prior iteration. November is the second month of the December quarter for Activision (ATVI), Electronic Arts (EA) and Take-Two (TTWO), with results looking most positive for Activision, Olson tells investors in a research note. He believes EA is facing challenges with consumer frustration around Star Wars microtransactions while Take-Two will continue to rely on NBA 2K18 and GTA Online. The analyst keeps an Overweight rating on all three names.
12/07/17
BARD
12/07/17
NO CHANGE
BARD
Data so far suggesting healthy holiday game sales, says Baird
Baird analyst Colin Sebastian noted that French game maker Ubisoft (UBSFY) raised its revenue and margin guidance for the December quarter, which he views as a slight positive for video game industry sales momentum this holiday season. Data also point to solid sales for both Sony's (SNE) PS4 and Nintendo's (NTDOY) Switch, which are a driver of software as well as a key catalyst for Gamestop (GME), Sebastian added. Other publicly traded companies in the video game space include Activision Blizzard (ATVI), Electronic Arts (EA), Take-Two (TTWO) and Microsoft (MSFT).
DIS Disney
$110.92

0.35 (0.32%)

12/15/17
EDJN
12/15/17
DOWNGRADE
EDJN
Hold
Disney downgraded to Hold from Buy at Edward Jones
Edward Jones analyst downgraded Disney (DIS) to Hold from Buy saying the acquisition of 21st Century Fox (FOXA) increase Disney's dependency on cable networks and adds various complexities. Additionally, the firm's analyst views Disney shares as fairly valued following recent share appreciation in light of the deal.
12/15/17
LOOP
12/15/17
NO CHANGE
Target $106
LOOP
Hold
Disney's Star Wars opening weekend estimated remains $225M, says Loop Capital
Loop Capital analyst David Miller keeps his Hold rating and $106 price target on Disney (DIS), forecasting the opening weekend box office for Star Wars: The Last Jedi at $225M, the ultimate domestic take of $850M, and global revenue of $1.7B. The analyst says the film was "awesome" - as good, if not better than The Force Awakens which cleared $2.07B in global box office. Miller also notes that Disney discussed the implications of the company taking managerial control over Hulu, saying CEO Bob Iger appeared non-committal on whether to use Hulu as the head-to-head competitor with Netflix (NFLX) or await its Direct-To-Consumer product to be launched in mid-2019.
12/15/17
WELS
12/15/17
NO CHANGE
Target $135
WELS
Outperform
Disney price target raised to $135 from $116 at Wells Fargo
Wells Fargo analyst Marci Ryvicker raised her price target for Disney (DIS) shares to $135 following the company's acquisition of 21st Century Fox (FOXA) assets. The analyst is positive on the deal and sees "significant potential upside" for Disney. She notes, however, that the new company is more complex given the consolidation of Hulu and addition of Sky. Ryvicker keeps Outperform rating on Disney shares.
12/15/17
KEYB
12/15/17
DOWNGRADE
KEYB
Sector Weight
21st Century Fox downgraded to Sector Weight from Overweight at KeyBanc
KeyBanc analyst Andy Hargreaves downgraded 21st Century Fox (FOXA) to Sector Weight saying that while he views the asset sale to Disney (DIS) as positive for both sides, regulatory risks are high. The analyst sees total potential value in the deal at $42 for Fox shares, but feels a discount is warranted given the regulatory risk. Hargreaves believes current fair value for Fox shares is $37.
ATVI Activision Blizzard
$65.03

0.43 (0.67%)

12/12/17
12/12/17
UPGRADE

On The Fly: Top five analyst upgrades
Catch up on today's top five analyst upgrades with this list compiled by The Fly: 1. Verizon (VZ) upgraded to Buy from Neutral at Nomura Instinet by analyst Jeffrey Kvaal, who said that better visibility into subscriber growth, rising average revenue per user and cost control will drive earnings growth in 2018. Further, he believes tax reform should also boost the company's earnings. The analyst thinks signs of easing competition may also spur multiple expansion. 2. Northrop Grumman (NOC) upgraded to Overweight from Neutral at JPMorgan by analyst Seth Seifman, who said that more profitable F-35 growth will accelerate in 2018 while management's initial take on the Orbital ATK (OA) deal, including synergies, will prove conservative. He called Northrop his top defense prime pick. 3. Activision Blizzard (ATVI) upgraded to Buy from Neutral at Goldman Sachs by analyst Christopher Merwin, who recommends owning this discounted "high-quality" asset ahead of accelerating earnings growth over the next 2-3 years. Merwin raised Activision's 2019 and 2020 estimates to reflect a robust pipeline of games including Diablo, Overwatch 2, and a Blizzard mobile title, which he does not believe Street estimates fully reflect. 4. Abbott (ABT) upgraded to Outperform from Market Perform at BMO Capital by analyst Joanne Wuensch, who said she is placing the stock on her "Top Picks" list, noting that 2018 will be the "year of execution" with several product launches ahead and acquisitions of Alere and St. June in the past. 5. HCA Healthcare (HCA), Tenet (THC) and Universal Health (UHS) upgraded to Buy from Neutral at Citi by analyst Ralph Giacobbe, who cited a more constructive view on the hospital space. The analyst sees a better volume backdrop in 2018 and low expectations for the sector. He believes hospital stocks offer an attractive upside scenario. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
12/12/17
GSCO
12/12/17
UPGRADE
GSCO
Buy
Activision Blizzard upgraded to Buy from Neutral at Goldman Sachs
12/12/17
GSCO
12/12/17
UPGRADE
Target $73
GSCO
Buy
Activision Blizzard upgraded to Buy from Neutral at Goldman Sachs
Goldman analyst Christopher Merwin upgraded Activision Blizzard to Buy and raised tis price target to $73 from $67. The analyst recommends owning this discounted "high-quality" asset ahead of accelerating earnings growth over the next 2-3 years. Merwin raised Activision's 2019 and 2020 estimates to reflect a robust pipeline of games including Diablo, Overwatch 2, and a Blizzard mobile title, which he does not believe Street estimates fully reflect.
NTDOY Nintendo
$47.78

-0.95 (-1.95%)

10/09/17
NEED
10/09/17
NO CHANGE
Target $20
NEED
Buy
Nintendo Switch sales to drive upside for Cypress Semiconductor, say Needham
Needham analyst Rajvindra Gill says that strong demand for Nintendo's (NTDOY) Switch consoles may drive near-term and possibly long-term upside for Cypress Semiconductor (CY). Cypress currently supplies one WiFi/BT combo chip per console and two Bluetooth controllers for every device, writes Gill in his research note. He says Nintendo will likely exceed its 20M sales target on the gaming system. More importantly, FY18 will mark the start of Switch sales in China, where the analyst estimates sales of 16M units. Gill maintains a Buy rating and a $20 price target on Cypress Semiconductor.
10/25/17
LYON
10/25/17
DOWNGRADE
LYON
Sell
Nintendo downgraded to Sell from Underperform at CLSA
11/13/17
BMOC
11/13/17
UPGRADE
Target $200
BMOC
Market Perform
Nvidia upgraded to Market Perform at BMO Capital on strong data center business
As noted earlier, BMO Capital analyst Ambrish Srivastava upgraded Nvidia to Market Perform from Underperform and raised his price target to $200 from $135. Srivastava says the company has demonstrated a "far stronger" data center business than he had forecast and its leverage is greater than anticipated. The analyst adds that his prior negative view was based on anticipated deceleration in the gaming industry, however the business wins at Nintendo and help from the cryptocurrency market allowed Nvidia to achieve higher levels that expected.

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Ocular Therapeutix

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Dow Jones Industrial Average

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iShares Transportation Average

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Energy Select Sector SPDR

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XLY

Consumer Discretionary Sector SPDR

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Lincoln National

$83.06

0.08 (0.10%)

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