Investing.com– BMO Capital Markets downgraded Electronic Arts Inc (NASDAQ:EA) on Wednesday after the videogame company slashed its annual net bookings forecast on underperformance in its flagship soccer franchise.
BMO downgraded EA to Market Perform from Outperform, and also cut its target price to $145.0 from $160.0.
The brokerage noted severe underperformance in EA’s flagship titles, especially Dragon Age: The Veilguard- which missed internal sale forecasts by 50%. College Football 2025 was also seen lagging, amid increased competition from the launch of Activision’s Call of Duty: Black Ops 6 in the same period.
But the biggest weight on EA’s bookings was underperformance in its flagship Football Cup franchise. FC25- which was initially a major breadwinner for the company- now appeared set for a mid single-digit decline in bookings for fiscal 2025, following two years of double-digit growth.
BMO noted that momentum in the franchise had run dry after the conclusion of Copa America, UEFA Euro Cup and the Summer Olympics in 2024.
BMO also noted that EA was headed for an uncertain fiscal 2026, amid doubts over its lineup, as well as the prospect of increased competition, especially from stalwarts such as Take-Two Interactive Software (ETR:SOWGn) Inc (NASDAQ:TTWO), which is set to launch its hotly awaited GTA VI in 2025.
EA slashed its fiscal 2025 new bookings outlook to a range of $7 billion to $7.15 billion from a prior forecast of $7.5 billion and $7.8 billion.
The company forecast December quarter earnings per share at $1.11- in line with guidance, but also cut its bookings guidance for the quarter.
While sports games have remained a major earnings driver for EA, it is struggling to diversify amid limited success in its ventures beyond sports, especially amid intense competition from American and Japanese companies.