The Sims is an Underrated Asset for EA: Needham

FIFA and Madden are Electronic Arts’ prized possessions, but The Sims is the underrated asset creating upside for the stock, according to Needham analyst Laura Martin. Martin raised her price target to $150 from $135 on Friday morning.

The Sims: The Sims is a hidden asset in EA's game portfolio, according to Needham analyst Laura Martin, who notes that the title rakes in $400 million a year at a high gross profit margin of 90%. Furthermore, The Sims represented about 8% of EA's total revenue and nearly 10% of EA's Gross Profit in FY20A, according to Martin. 

• Gift that keeps giving: The Sims 4 reached ten million monthly active users in the last quarter, even though it has been on the market for nearly six years.

eSports opportunity:.With traditional sports on hold much of the last few months, eSports has capitalized on the demand for live competition. According to EA, total broadcast hours for FIFA, Madden, and Apex Legends grew by 250% in April on a year-over-year basis. Needham sees significant upside in eSports and believes EA is in talks with FIFA about a “potential structure and economic splits of selling teams and starting an eSports league similar to Overwatch.