Analyst Update: Electronic Arts, Dicks Sporting Goods

Analysts adjusted their ratings on Electronic Arts Inc. (EA), Magic Software Enterprises Ltd. (MGIC), and Dicks Sporting Goods Inc (DKS)

by Kirra Fedyszyn

Published on Nov 12, 2015 at 12:35 PM
Updated on Jun 29, 2020 at 4:09 PM

Analysts are weighing in today on video game maker Electronic Arts Inc. (NASDAQ:EA), software developer Magic Software Enterprises Ltd. (NASDAQ:MGIC), and sports retail concern Dicks Sporting Goods Inc (NYSE:DKS). Here's a quick roundup of today's brokerage notes on EA, MGIC, and DKS.

  • Oppenheimer began coverage on EA with an "outperform" rating, ahead of the Nov. 17 launch of its "Star Wars: Battlefront" game. Electronic Arts Inc. hit an all-time high of $76.92 on Oct. 29 -- the same day the company raised its sales forecast for the upcoming game, and announced third-quarter earnings and revenue that beat expectations. EA was last seen up 1.3%, trading at $72.23, and has added an impressive 53.6% so far in 2015. Analysts are bullishly aligned on the stock, with 12 out of 16 firms following EA giving it a "strong buy" rating. However, at EA's average pace of trading, it would take nearly a week to repurchase all the shorted shares -- plenty of fuel for a short squeeze to propel the security even higher.

  • MGIC is up 2.8% today, last seen trading at $5.86, after Barclays gave the security an upgrade to "overweight" from "equal weight." The software developer reported a third-quarter earnings beat before the market opened on Wednesday, allowing the shares to gain back some ground after hitting a two-year low of $5.28  on Monday. While Magic Software Enterprises Ltd. is still sitting on a 1.5% year-to-date loss, Wall Street has kept the faith, with a 2-1 majority of analysts giving the security a "strong buy" rating, and not a single "sell" on the books. MGIC also holds a Schaeffer's put/call open-interest ratio (SOIR) of 0.28 – a reading in the 22nd annual percentile. This means near-term options traders have been far more call-heavy recently. 

  • DKS was last seen trading at $42.26, a loss of 3.4% for the day, after Brean Capital gave the stock a price-target cut to $53 from $60. Dicks Sporting Goods Inc, which will report third-quarter earnings next week, has lost 14.9% year-to-date, and sits just off of its one-year low of $41.83, hit on Oct. 23. DKS seems to be just one of many retailers suffering as the holiday shopping season approaches. Options traders are pricing in an 8% post-earnings swing, according to near-term at-the-money straddle data -- almost double the average one-day after-earnings move of 4.4% over the last eight quarters. And it looks as though traders are hoping for a downward move, as DKS has a 10-day put/call volume ratio of 3.82 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- just 8 percentage points shy of an annual bearish high. Meanwhile, nine of the 21 firms following the stock still rate it a "strong buy." More downgrades could easily send the shares falling lower.

For other stocks in analysts' crosshairs, read Analyst Upgrades: Eli Lilly and Co, Boston Scientific Corporation, and Exxon Mobil Corporation and Analyst Downgrades: Macy's, Inc., Freshpet Inc, and United States Steel Corporation.

 


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