Shares of Electronic Arts Inc (NASDAQ: EA) have recovered more than 10% over the last two weeks, but MKM Partners says there’s more to come in the upcoming months.
Handler’s remarks on CNBC’s “Power Lunch”
The firm’s media and entertainment analyst Eric Handler reiterated his “buy” rating on EA this morning amidst the ongoing sell-off in the broader market. He has a price target of $180 on the stock that represents a 26% upside from here. On CNBC’s “Power Lunch”, Handler said:
EA hasn’t done well lately because people have rotated into reopening trades, and comparisons are very challenging. That being said, I think it’s a matter of when people rotate back to EA and not if.
Other reasons why he likes Electronic Arts include its focus on expansion. EA acquired Playdemic this year after bringing Codemasters under its umbrella in 2020. It is now the second-largest gaming company in the Americas and Europe by revenue and market cap after Activision Blizzard.
Other names that Handler likes within the gaming niche
Handler expects gaming companies to note accelerated growth in 2022 as “secular trends” are now better than before the pandemic. He added:
These are good free cash flow generating businesses that are currently trading at valuation multiples of multi-year lows.
Another name that particularly pops out to Handler within the gaming space is Zynga Inc (NASDAQ: ZNGA). He rates the San Francisco-based game developer at “buy” with a price target of $10.50 that translates to a 45% upside from here.
Zynga stock is currently down about 40% from its year-to-date high of $12 a share in February.
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