Electronic Arts "Star Wars Battlefront II" sales will improve after a weak and controversial start, according to one Wall Street firm.
Wedbush Securities reiterated its outperform rating for Electronic Arts shares, citing the company's strong game pipeline for the next fiscal year.
EA shares rose 3 percent Tuesday after the report.
"The sell-off in recent weeks appears overdone," analyst Michael Pachter wrote in a note to clients Tuesday. "Although Star Wars Battlefront II had a weaker-than-expected debut in terms of its domestic physical sell-through, we believe that the loyalty of the Star Wars fan base, the game's appeal as a holiday gift, and the release of Star Wars: The Last Jedi on December 15 will result in sales of the game bouncing back in the December retail month."
Pachter maintained his $136 price target for Electronic Arts shares, which is 29.5 percent above Friday's closing price. The stock is also on the firm's "Best Ideas List."
The analyst noted that EA shares have "traded down significantly" since the end of October. The stock declined 12 percent during the last two months of 2017 versus the S&P 500's 4 percent gain.
"The initial catalyst was weaker-than-expected Q3:18 guidance, which suggested sagging expectations for Star Wars Battlefront II," he wrote. "Downward pressure was exacerbated by criticism of the title's MTX model, which EA pulled before launch, as well as a broader sector sell-off."
Electronic Arts announced Nov. 16, a day before the "Star Wars Battlefront II" game's official launch, that it is temporarily turning off all in-game purchases for the game in response to negative sentiment from gamers on social media.
Pachter is optimistic over EA's title pipeline in fiscal 2019, which begins in April. Upcoming titles include "Anthem," "FIFA World Cup," the next "Battefield" game and "Titanfall 3."
"The Street's FY:19 expectations may prove to be too conservative given EA's loaded lineup," he wrote.