Options Traders, Analysts Play EA After Earnings

Eight analysts have raised their price targets today

Deputy Editor
Jul 31, 2020 at 10:06 AM
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The shares of Electronic Arts Inc (NYSE:EA) are up 1.8% at $141.10 at last check this morning, enjoying modest gains after the video game maker reported fiscal first-quarter earnings and revenue that topped analyst estimates. CEO Andrew Wilson announced "an unprecedented first quarter of growth in our business," as sales soared thanks to stay-at-home gamers amid social distancing due to coronavirus. This caused the company to raised its full-year guidance, after which no fewer than eight analysts hiked up their price targets -- the highest coming from UBS to $170 from $126. 

On the charts, EA is now a chip-shot from it's two-year July 20 high of $142.31, and on track for its third straight win. Year-to-date, the equity is up around 32% now, with pullbacks this summer being contained by its 30-day moving average.

On the analyst front, 14 out of the 23 in coverage sport a "buy" or better, with the remaining nine at a "hold." Meanwhile, the 12-month consensus target price of $143.31 is just a 3.4% premium to last night's close, meaning more price-target hikes could soon be in order. 

In the options pits, EA's 50-day put/call volume ratio of 0.62 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), stands higher than 93% of readings from the past year. So, while calls are outnumbering puts on an overall basis, there are still a much higher amount of put options being traded than usual. 

Today though, the appetite has shifted more to calls. In just the first hour of trading, over 6,000 calls have changed hands -- eight times the average intraday amount and double the number of puts traded. Most popular is the weekly 7/31 145-strike call, which expires at the end of the day today.

 

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