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)

Nov 12, 2015 at 12:35 PM
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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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