NEW YORK (AP) — Shares of Electronic Arts Inc. took a hit Monday after Sterne Agee analyst Arvind Bhatia downgraded the video-game publisher citing concerns that it won't meet Wall Street's revenue expectations for its fiscal year 2013, which ends in March.
THE SPARK: Bhatia downgraded EA to "Neutral" from "Buy" on concerns that Wall Street's expectations for fiscal 2013 will prove "overly optimistic." Analysts polled by FactSet expect EA to post revenue of $4.08 billion for the year. Bhatia is now forecasting $3.87 billion, down from his previous expectation of $4.14 billion.
ANALYSIS: He said his revenue estimate reduction results from a "less-than-stellar" holiday season for video games, as well as his "tempered expectations" for EA's fourth-quarter titles such as "Dead Space 3," ''Crysis 3" and "Army of Two."
Bhatia said he thinks that some — though not all — of the valuation premium of EA's stock relative to rival Activision Blizzard Inc. "could disappear." But he added that EA does have a more diverse game portfolio, so some of the premium will remain.
SHARE ACTION: Shares of Redwood City, Calif.-based EA fell 37 cents, or 2.5 percent, to $14.51 in late trading. The stock has traded in the 52-week range of $10.77 and $20.64.