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ERTS: Another Downgrade, This Time From Merrill

One day after being downgraded by Goldman Sachs, Electronics Arts (ERTS) shares are under fire again, this time from Bank of America/Merrill Lynch analyst Justin Post, who this morning downgrade the stock to Neutral from Buy, cutting his price target to $19, from $26. The stock yesterday closed at $18.05.

Post writes that his downgrade follows lower-than-expected sales according to the latest data on video game sales from market research firm NPD. Post writes that improved title quality - in particular, the new version of Madden - is not translating to better sales, and that given risk to EPS estimates, the stock is likely to lag the Internet group, where he sees Q4 earnings upside. For the December quarter, he sees revenue of $1.35 billion, well below the Street at $1.6 billion.

Post cut his March 2010 fiscal year estimate to 79 cents from 94 cents, well below the Street at 97 cents.
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