The market has overlooked the underlying performance for video game publisher Electronic Arts this year, and investors should take advantage, according to BMO Capital Markets. Analyst Gerrick Johnson upgraded the stock to outperform from market perform, saying in a note to clients on Monday night that the video game business was going strong even as the market had shifted toward reopening plays. "We believe that video game engagement and spending trends may be higher coming out of the pandemic than most investors expected. Furthermore, the pandemic isn't over, with fresh lockdowns occurring in many international regions, especially Asia," the note said. EA's stock has struggled to gain traction in 2021 and is down 1.5% year to date. Rival Activision Blizzard hasn't faired much better, with its shares flat since the end of December. However, one of EA's key franchises has continued to grow even as investors have looked past the video game stocks. BMO hiked its net bookings estimates for Apex Legends in the upcoming fiscal year by 19% based on current trends. "Apex Legends shows no signs of slowing down. In fact, the game keeps growing. We think there has been a tremendously positive reception to the new Arenas mode incorporated in season 9," the note said. The firm also said EA's sports franchises, such as the Madden NFL series, could outperform in 2021 with a more normalized sports calendar compared with last year. BMO raised its price target on EA to $168 per share from $150. The new target is roughly 19% above where the stock closed on Monday. -CNBC's Michael Bloom contributed to this report.
