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MoffettNathanson Cuts Electronic Arts Shares to Neutral on Valuation -Breaking


© Reuters. MoffettNathanson Reduces Electronic Arts (EA), Shares to Neutralize on Valuation

By Senad Karaahmetovic

Clay Griffin, MoffettNathanson Analyst, has downgraded Electronic Arts (NASDAQ) shares ratings to Neutral From Buy. He also set a target of $147.00 per share. That’s an increase over the $141.00.

Just four weeks ago, the same analyst recommended that EA stock be bought.

“We upgraded EA to Buy with the thesis that its relative stability, clean balance sheet, ample free cash flow generation, and a meaningful discount to its historical valuation multiple ranges offered a great set-up for investors looking for a safe haven,” Griffin told clients in a note.

So why is the downgrade happening now? Griffin took the decision after EA shares rose by more than 22%, surpassing the market by 21%.

“We can’t help but feel like the proverbial dog that unexpectedly caught the car it was chasing,” Griffin added.

Although he believes in the fundamentals of the company, the analyst is not convinced by the valuation. He sees it as an important reason for his decision to return to the sidelines.

EA shares today are around 2% lower