JPMorgan analysts are signaling a bullish outlook for the mobile gaming industry, predicting a rise in console gaming spending next year driven by a robust slate of new releases. The research firm recently updated its coverage of several prominent video game companies, including Roblox, Applovin, and Electronic Arts, ahead of their upcoming third-quarter earnings reports.
Roblox: A Favorite Among Gaming Titans
JPMorgan declared Roblox as one of its top picks in the video game sector, citing its robust engagement trends, expanding advertising and commerce business, and a projected 30% free cash flow compounding through 2027. The analysts highlighted data showing Roblox’s daily active users (DAUs) exceeding estimates, hinting at potential upside for third-quarter bookings. In light of this positive outlook, JPMorgan maintained its Overweight rating on Roblox shares and increased its price target from $50 to $51 ahead of the company’s earnings release on October 31st.
Applovin: A Leading In-App Monetization Platform
JPMorgan recognized Applovin as a leader in in-app monetization platforms for mobile gaming companies. The firm conducted research with industry contacts who reported that Applovin accounted for a significant portion – between 40% and 60% – of their user acquisition spending. Despite anticipating strong third-quarter results for Applovin due to steady growth in the mobile gaming industry, JPMorgan maintained a Neutral rating on the stock. The analysts explained that they are awaiting evidence that Applovin can successfully expand beyond the gaming sector. However, their confidence in Applovin’s potential is reflected in their significant increase of the price target, from $57 to $160.
Electronic Arts: A Scale-Focused Giant
JPMorgan highlighted Electronic Arts (EA) as the largest pure-play game publisher in the industry, with a focus on scaling its operations and leveraging its expansive intellectual property (IP) portfolio. While maintaining a Neutral rating and a $155 price target, the firm expressed a desire to see more consistent execution on non-sports titles from EA. Electronic Arts is scheduled to be the first company in the group to report its quarterly results on October 29th, after the market closes. Wall Street analysts anticipate the company will report earnings of $2.02 per share on revenue of $2.036 billion, based on data from Benzinga Pro.