Shares of

Electronic Arts

(ERTS)

traded off as much as 3% on Wednesday after an analyst downgraded the stock.

Citing valuation concerns and the potential for bad news, Citigroup Smith Barney analyst Elizabeth Osur lowered her rating on the video game software giant to a hold from a buy late Tuesday.

"We think risk/reward ... has become incrementally less favorable given the recent run-up," said Osur in a research report, noting that EA shares rose 6.5% on Tuesday. (EA has been a non-investment banking client of Citigroup in the last year.)

In recent trading, EA's shares were off $1.66, or 2.7%, to $59.91. Earlier in the session, the stock traded down as much as $1.91, or 3.1%, to $59.66.

The stock closed at $61.57 on Tuesday, its highest close since March, when

Electronic Arts issued an earnings warning. At that level, the stock was almost at Osur's $62 price target, the analyst noted in her report.

At that price, Osur saw limited upside to the stock. Meanwhile, the stock could take a hit due to a number of short-term factors, she said. Research group NPD plans to release June sales figures later this week. And EA plans to release earnings next week. Osur doesn't expect any surprises from either report, but the potential remains that June sales come in lower than expected or that EA will cut its guidance for coming quarters, either of which could affect the stock price.

EA announced last week that it is pushing back the launch of its game based on the movie

The Godfather

. Although Osur believes the financial impact of the move will be relatively small for EA, the company could use the delay as an excuse to lower its earnings outlook for the fourth quarter and full year, she said.

"We think that the near-term risk/reward profile of ERTS has deteriorated," Osur said. "Longer term, we continue to believe that the company will be a strong long-term beneficiary of the video game console cycle."