Electronic Arts inc. (ERTS – Analyst Report), or EA, and Klei Entertainment unveiled their latest offering, Shank 2, which will be available from early 2012. it is the sequel to last year’s Annie Award nominated downloadable action title, Shank.
Shank 2, in line with its predecessor, has an action-packed storyline where the protagonist, Shank, a former mob hitman, returns to protect the endangered lives of the persons close to him. The features and game controls of the new version is akin to the original version, with a new arcade-style co-op mode that gamers would have to work out together to finish off the enemy.
Shank 2 will be available for Microsoft Corp.’s (MSFT – Analyst Report) Xbox LIVE Arcade, Sony Corp’s (SNE – Snapshot Report) PlayStation Network and PCs.
EA has a hand full of releases for the holiday season, with Star Wars: the old Republic, the most anticipated massively multi-player online (MMO) game, awaiting release in December 2011.the game is expected to drive EA’s subscriber base going forward, boosting its market share in the online gaming market over the long term.
in October, EA expects to launch Crysis and Battlefield and we believe the twin releases will provide a competitive edge to EA against Activision Blizzard Inc. (ATVI – Snapshot Report).
we believe that high-quality titles, an impressive product line, increasing exposure to online and social games and diversification of the portfolio guarantees market share gains over the long term.
we believe that with EA’s variety of titles and massive fan following, the company is better equipped than many new players to gain traction in the digital format. Additionally, the strategic acquisitions made by the company in the field of social and casual gaming platforms will reap benefits in the long run.
EA boasts a solid product pipeline for fiscal year 2012, which should allow it to generate strong growth through the current fiscal year and beyond.
however, while we think the new games will shed some light in the next few months, it is hard to discount the gloomy macro environment in North America, increasing competition and weak video game results during the last 12 months, which compel us to remain cautious in the near term.
we therefore have a Neutral recommendation on Electronic Arts over the long term (for the next 3 to 6 months). for the short term (1-3 months) also, we have a ‘Hold’ rating on the stock, as indicated by the Zacks #3 Rank.
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