EA, Activision see shares climb following earnings report

Yesterday was a major fiscal day in the game publishing world as both Electronic Arts and Activision reported their earnings. Both companies showed stronger than expected results and the investment community is clearly happy the morning after. Currently, EA shares are riding high, up almost 17 percent to $32.72 while Activision's stock has increased nearly 7 percent to $20.58.

Wedbush analyst Michael Pachter is encouraged by what he's seen from both publishers. "We believe EA has the lineup to deliver solid revenue and EPS growth in its out year. With the return of Battlefield and Need for Speed, EA is positioned to deliver significant revenue growth in FY:16. We expect digital revenues to grow by at least $200 million a year, and believe that EA can grow its overall revenues by $400 million next year. Assuming it keeps its costs in check, the company should be able to deliver $0.50 or more in EPS growth in FY:16," he said.

Regarding Activision, Pachter didn't mince words, labeling the company's product slate in 2014 "among its best ever."

"The company has overcome concerns about declines for its core franchises," he added. "Skylanders withstood an onslaught from a competitive product to achieve record sales; Call of Duty sales declined only slightly, and are expected to rebound this year from a stronger franchise with less competition; and World of Warcraft subscribers appear to have stabilized. We think that brand extensions and expansion packs for Blizzard's three core franchises can keep its revenues stable for a long time, and it may see revenue growth when it launches a new MMO, expected in 2015 or 2016. We also see a bright future for the launch of Call of Duty China expected sometime early next year."