Oddo BHF reiterates its "underperform" rating on Ubisoft, lowering its target price from 5 to 3.5 euros, following the release of a quarterly revenue up 12% to 338 million euros, which is close to management's guidance from January 21 (330 million euros).
"This publication is in line with the major profit warning issued on January 21. Therefore, we have no reason to change our earnings forecasts again," the analyst states, maintaining a negative stance on the stock.
According to him, "it will take at least three years for the new organization to enable the group to regain its ability to regularly launch successful games, thus returning to sustainable growth and robust cash generation."
Given the ongoing social tensions within the company (strike actions), the target price has been lowered to 3.5 euros (with the group’s valuation discount increased to 50% compared to the multiples of major transactions in the sector).
Ubisoft Entertainment is one of the world's leading developers and publishers of interactive video games for consoles, PCs, smartphones and tablets. Net sales break down by activity as follows:
- publishing of video games (69.6%);
- edition and production of video games (30.4%).
Net sales by source of income are divided between online sales of video games (86.9%), video game boxes (7.9%), services (3.6%; including digital or physical delivery of content, update, correction, enhancement and maintenance services) and licenses (1.6%).
Net sales are distributed geographically as follows: Europe (32.1%), North America (45.7%) and other (22.2%).
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