Analyst: Buy Electronic Arts Stock on eSports Buzz

The brokerage firm said esports could spark accelerated revenue growth for the sector

Berenberg initiated coverage on Electronic Arts Inc. (NASDAQ:EA) with a "buy" rating and $145 price target -- a 27.2% premium to last night's close. The brokerage firm said it was "deeply excited" about the video game sector, citing e-sports as a positive catalyst for revenue growth. This bull note is offsetting news of rape allegations against EA-sponsored soccer star Cristiano Ronaldo, with the shares up 0.2% at $114.23.

Most analysts are already upbeat on Electronic Arts, with 17 maintaining a "buy" or better rating, compared to five that say the equity's a "hold" -- though Stifel recently pegged Activision Blizzard (ATVI) as its video game stock of choice. Plus, the average 12-month price target for EA sits all the way up at $141.15.

This optimism is seen in the options pits, too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), EA's 10-day call/put volume ratio of 5.77 ranks in the 92nd annual percentile -- meaning calls have been bought to open over puts at a quicker-than-usual clip.

This bullishness doesn't seem warranted when looking at EA's technical backdrop, though. The stock has shed 25% since its mid-July record high of $151.28. What's more, the shares have been stuck below stiff resistance at their 320-day moving average since a late-August bear gap, with the 40-day trendline recently emerging as another ceiling. This puts Electronic Arts stock at risk for bearish backlash, which could pressure the equity even lower.