Electronic Arts Inc. shares fell Wednesday after a Cowen and Co. analyst raised concerns about the video game maker's sales.
THE SPARK: Cowen and Co. analyst Doug Creutz said in a research note that, based on an industry report out of the UK, he believes the company's sales of its soccer video game FIFA 14 will be down about 7 percent year over year. Because this game is so critical to the company's success, the analyst also lowered his full year earnings forecast for EA.
Creutz now expects EA to earn $1.21 per share for the year, versus his prior forecast of $1.30 per share. Analysts polled by FactSet were forecasting $1.24 per share.
THE BIG PICTURE: A report by industry tracking company Chart-Track on Monday said that FIFA 14 is the top selling video game of the week but that sales are down by 24 percent by comparison to last year's popular version of the game.
Chart-Track said part of this issue may be that it comes a week after Grand Theft Auto V debuted, the latest edition in the supremely popular video game series.
THE ANALYSIS: The analyst had been assuming FIFA 14 sales would be roughly flat year over year, but based on the weaker first-week performance in its critical UK market, he believes sales will fall 7 percent year over year.
Creutz estimates that the UK accounts for about 30 percent of FIFA sales, making its performance there critical and also representative of its performance worldwide.
He noted that some sales may have been delayed due to the GTA V launch and some next generation consoles that are expected soon could give FIFA sales a boost. But the analyst opted for a more cautious stance.
SHARE ACTION: Shares fell 81 cents, or 3.1 percent, to $25.61 by midday. Its stock fell as low as $25.06 earlier in the day. Its shares have traded between $11.80 and $28.13 in the past 52 weeks.