Morgan Stanley Analyst Brain Nowak Downgrade EA To Equalweight

EA has faced backslash last year on the Battlefront 2 Micro-transaction controversy. This is the biggest one in the video game industry where gamers were extremely angry over the introduction of the pay-to-win model in the game. The impact was so high that the publisher has to take a step back and had to withdraw the revenue model where players have to spend hours to unlock a character, or else they can pay for it.

Morgan Stanley

The disappointing slow start of Star Wars Battlefront 2 sales also had a huge impact on EA reputation. Analyst Brian Nowak from Morgan Stanly downgraded EA from Overweight to Equalweight on a price target of $120 which was before $126.00. Brain commented “Recent disappointing Star Wars Battlefront 2 third-party data (NPD and GfK ) cause us to lower our Star Wars unit estimate from 13mn in F3Q to 10mn. These lower unit expectations flow down to the bottom line.”

Still, Star Wars Battlefront 2 was able to make its position on the list of top 10 best-selling games according to NPD. It was also the most downloaded game on PlayStation in December 2017. Ample of brokerages who cover EA has rated the share as a buy or strong buy option, but the downgrade and price-target cuts have not stopped completely. Analyst predicts there can be more at the edges, but it looks analyst is optimistic towards this changing share price scenario.

Brian also shared some thought on the implementation of the microtransaction in Battlefront 2, which is not completely withdrawn. According to him, If EA plans then they have to wait until fiscal fourth quarter. And once it is introduced it will be “heavily scrutinized” by the gamers due to its previous bad reputation.

Source: Swtorstrategies