History Says Don't Sweat the EA Pullback

Benchmark just hiked its price target on the stock to $150

Deputy Editor
May 24, 2023 at 1:08 PM
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A historical outperformer in both the month of May and in the days leading up to Memorial Day, now looks like the perfect time to initiate a bullish position on video game concern Electronic Arts Inc (NASDAQ:EA).

Specifically, EA is trading near its historically bullish 260-day trendline. Per data from Schaeffer's Senior Quantitative Analyst Rocky White, Electronic Arts stock flashed five similar signals over the last three years, finishing higher each time, averaging a 4.7% one-month gain. The equity was last seen 0.2% lower at $125.01, even after Benchmark hiked its price target to $150. A move of similar magnitude would send the security above its Jan. 27, 2023 peak of $130.57.

EA Chart May 242023

Electronic Arts holds a marginal year-to-date lead, up 2.3% after adding nearly 12% over the previous three months. On a closing basis, the $124 area has kept the shares' pullbacks in check. Should more analyst pessimism unwind, tailwinds could push EA shares even higher. Currently, 11 of 22 covering brokerage firms call the stock a "hold."

A shift in the options pits could also bode well for Electronic Arts stock, as short-term traders are unusually put-biased. This is per the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.24, which stands higher than 84% of reading from the past 12 months. 

For those wanting to get in on Electronic Arts' next move with options, now might be the time. EA's Schaeffer's Volatility Index (SVI) of 19% sits lower than all but 5% of readings from the past year. This means options players have been pricing in incredibly low volatility expectations of late. 

 

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