Brian Pitz, an analyst from BMO Capital, maintained the Hold rating on Electronic Arts. The associated price target was raised to $210.00.
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Brian Pitz has given his Hold rating due to a combination of factors surrounding Electronic Arts’ recent acquisition announcement. The company is set to go private in a $55 billion leveraged buyout, which involves a consortium of private equity buyers offering $210 per share, representing a 25% premium. While this deal is significant, Pitz raises concerns about the sustainability of EA’s intellectual property licenses, as many of these agreements may be subject to change-of-control provisions that could be renegotiated or terminated if the acquisition proceeds.
Additionally, the deal’s valuation metrics, such as the implied 22x-23x LTM EBITDA, are higher compared to industry peers like Microsoft/Activision. This suggests that while the deal offers immediate financial benefits, there may be limited upside in the long term. Furthermore, the possibility of a strategic partner offering a more synergistic acquisition could present a better growth opportunity than the current LBO structure. These factors contribute to Pitz’s decision to maintain a Hold rating, reflecting a cautious outlook on the stock’s future performance.
In another report released today, Jefferies also downgraded the stock to a Hold with a $210.00 price target.