The game's battle-royale mode will likely boost the company's market share
Ahead of this week's annual E3 Expo, shares of Electronic Arts Inc. (NASDAQ:EA) hit a record high of $140.54, after Piper Jaffray reiterated its "outperform" rating and $148 price target on the video game stock. The brokerage firm waxed optimistic over the company's decision to add the trendy battle-royale mode to its "Battlefield V" game, scheduled for release on Oct. 19, saying it will likely result in 16 million unit sales in fiscal 2019.
More specifically, the analyst in coverage said this feature should help offset lost market share due to the surge in popularity of Epic Games' "Fortnite" game. And in addition to the "many potential catalysts" EA has in its pipeline, the stock "trades at a discounted valuation to its closest comp ATVI, [Activision]."
At last check, EA stock was trading up 1.1% at $139.42 -- continuing a recent run higher sparked by a strong bounce off its 200-day moving average. In fact, since springboarding off this trendline in early May, the shares have jumped nearly 22% -- on track to match its impressive 15.4% first-quarter gain.
Against this backdrop, most analysts are already upbeat on EA. Of the 20 brokerages covering the shares, 16 maintain a "buy" or better rating. However, the average 12-month price target of $143.24 is roughly in line with EA stock's current price, meaning there's room for a round of price-target hikes, which could draw more buyers to the table.
Those wanting to bet on more upside for Electronic Arts stock in the near term may want to consider options. The equity's Schaeffer's Volatility Index (SVI) of 23% ranks in the 8th annual percentile, meaning short-term options are pricing in relatively low volatility expectations at the moment -- a boon to potential premium buyers.