Electronic Arts (EA) is set to report Q2 results after the bell with a conference call slated for 5:00pm ET. 

Cap IQ Consensus estimates Q2 GAAP EPS of -$0.14 w/revs of $1.18 bln ( +31.4% y/y).

Guidance

In their Q1 earnings release EA issued the following guidance: 

• Q2 loss of -$0.18.
• Q2 revenues of $1.16 bln. 
  • This includes GAAP net revenue of $955 mln with change in deferred net revenue (online-enabled games) expected to be ~$205 mln
• Reaffirmed FY18 EPS guidance of $3.57/share. 
• Reaffirmed FY18 revenues of $5.1 bln.
  • GAAP total net revenue is expected to be ~$5.075 bln with change in deferred net revenue (online-enabled games) expected to be ~$25 mln

Analyst Commentary

• Target lowered to $126 from $128 at Morgan Stanley (October 18th). 
• Needham reiterates Buy, reiterates $130 tgt. 
• Initiated with a Buy at SunTrust; tgt $133 (October 11th). 
• Initiated with an Overweight at Barclays; $129 tgt (October 4th).

Options Activity

Based on EA options, the current implied volatility stands at ~ 32%, which is 67% higher than historical volatility (over the past 30 days). Based on the Weekly Nov03 EA $118 straddle, the options market is currently pricing in a move of ~6% in either direction by weekly expiration (Friday).

Spread is decreasing in size. Leaving limited cap to bottom or top.

TECHS:

Currently EA is breaking out of a wedge between MA's and a small downtrend. Look for a catch up trade higher if this thing bursts.

If not, then sellers will aim for the October low near 110, followed by the May bullish gap/July lows along the 105-level.