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The Zacks Analyst Blog Highlights: Netflix, Microsoft, Sony and Electronic Arts

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For Immediate Release

Chicago, IL – July 23, 2021 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Netflix, Inc. (NFLX - Free Report) , Microsoft Corporation (MSFT - Free Report) , Sony Group Corporation (SONY - Free Report) and Electronic Arts Inc. (EA - Free Report) .

Here are highlights from Thursday’s Analyst Blog:

3 Stocks to Watch as Videogame Industry Continues to Thrive

The videogame industry witnessed unprecedented growth during the pandemic and the momentum has continued since then, with people spending big money on buying new consoles, hardware and accessories.

Except for a surprise decline in April, videogame sales have been touching new highs for almost more than 18 months now. The industry was already flourishing and now new players are jumping on the bandwagon.

Videogame Industry Thriving

According to the NPD Group, consumer spending on videogames, accessories and content and hardware jumped 5%year over year in June to $4.9 billion. June's jump follows a 3% rise in May sales.

Spending on content that includes physical & digital full game, DLC/MTX console, cloud, mobile, portable, PC and VR platforms increased 1% on a year-over-year basis. Spending on hardware grew a whopping 112%, which shows how more Americans are spending on gaming.

The videogame industry has been performing well and is one of the biggest beneficiaries of the pandemic. Although the economy is reopening and outdoor entertainment is gradually resuming, it hasn't impacted videogame sales much.

Videogame Industry Poised to Grow

After an impressive 2020, videogame sales saw solid growth in the first and second quarters. Consumer spending on videogames was $28.9 billion in the first half of the year, reflecting a 15% year-over-year jump. On a year-to-date basis, sales on content, hardware and accessories have jumped 13%, 45% and 14%, respectively.

Although the economy is reopening and restrictions are being eased, with the vaccination drive in full swing, NPD believes that the industry will grow in the coming days, as some big titles await release.

In fact, sales are far higher than the pre-pandemic and pandemic levels and the momentum is likely to stay so. According to Newzoo, global videogame revenues could reach $189.3 billion in 2021, taking the total number of gamers to 2.8 billion worldwide.

Besides, new players are also venturing into the gaming market. Netflix announced on Jul 20 that it would be foraying into the gaming market, as subscriber growth declined last quarter. The streaming giant confirmed that it will be starting its ad-free videogame services for mobile devices like phones and tablets, which will be available to its subscribers on its existing services at no extra cost. This shows the growing competition in the gaming space.

Stocks to Watch

The videogame industry is witnessing robust sales in 2021, given that the pandemic is still keeping people indoors. This thus makes it an opportune time to invest in gaming stocks that are sure to benefit in the near term.

Microsoft is one of the leading videogame makers and manufacturers of hardware and accessories. The company has been expanding its footprint in the industry and recently announced that it will be acquiring videogame maker ZeniMax Media.

The company's expected earnings growth rate for the current year is 35.4%. The company's shares have gained 8% in the past 30 days.  Microsoft carries a Zacks Rank #3 (Hold).You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Sony designs, manufactures and sells several consumer and industrial electronic equipment. The company's product roster comprises audio and video equipment, televisions, displays, semiconductors, electronic components, gaming consoles, computers and computer peripherals, and telecommunication equipment. 

The company's expected earnings growth rate for next year is 17.6%. Its shares have gained 6.2% in the past 30 days. Sony has a Zacks Rank #3.

Electronic Arts is a leading developer, marketer, publisher and distributor of interactive games (video game software and content). It distributes gaming content and services through multiple distribution channels as well as directly to consumers (online and wirelessly) through its online portals.

The company's expected earnings growth rate for the current year is 12%. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the past 60 days.Electronic Arts has a Zacks Rank #3.

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