Investors are way too worried about the impact a rebranding of Electronic Arts ' FIFA video games could have on the stock, according to Bank of America. The bank upgraded the video game maker's stock to buy from neutral and raised its price target to $150 from $145. The new target implies shares can rise about 17% from Monday's close. A decadeslong partnership between FIFA — soccer's governing body — and Electronic Arts came to an end last year, when the company announced its longtime video game franchise would be rebranded to EA Sports FC. The game's first edition under the new name launched late last month. In that time, EA shares have lagged the broader market. The stock is up just 5.6% over the past 12 months, while the S & P 500 has jumped 20% in that time. Some investors have been especially wary of this change, but analyst Omar Dessouky noted that the balance of risk looks attractive, especially with the stock's relative valuation near a five-year trough. EA 1Y mountain EA in past year "Based on our analysis of SPORTS FC 24's early launch stats as well as pricing, we believe investor fear over SPORTS FC's franchise transition is overblown, and we view EA's current valuation discount vs game publisher peers as a particularly attractive point of entry," he wrote. Additionally, Dessouky said that the company's new game video game could provide upside to consensus estimates and guidance in the near term and beyond, especially following above-trend growth in the PC and console gaming market. "We expect the PC/Console software market to grow above trend (mid/high single digits) in CY24 and beyond," the analyst wrote. "EA's largest franchises are well-positioned to gain wallet share as it expands modalities of consumption; research has shown that players' in-game spending is highly correlated with the amount of time spent inside a game's ecosystem." — CNBC's Michael Bloom contributed to this report.
