(Boursier.com) — Focus Entertainment drops 2.2% to 48.4 euros at the end of the morning the day after a good half-yearly publication. Gross margin reached €25.1 million, or 38% of revenue, up significantly from the first half of 2021-2022, despite revenues down 18% to €65.5 million. As Oddo BHF explains, the group benefited from the good level of sales of Teenage Mutant Ninja Turtle, whose development costs were low. The basic effect was also rather favorable (several disappointing releases in N-1) while the integration of the Dotemu studio is accretive to the group’s gross margin.
Focus is continuing its transformation towards an integrated player model (Publisher/Developer) in order to control content and be better placed in the value chain, adds the analyst. In this sense, M&A will remain relevant in 2023 with the main targets being the group’s partner studios (up to 50 ME EV) and more strategic operations (between 50 and 200 ME EV). The rebound in activity expected in the second half of the year as well as in 2023-2024, combined with the evolution of the business model, seems relevant to play while the valuation remains attractive (EV/EBIT 13x March 2023 and 9.5x March 2024) . The broker thus reiterates its ‘outperform’ opinion and its target of 57 euros.
The publication illustrates the first fruits of the change in business model started nearly 3 years ago with a gross margin up 12 points to 38%, says TP ICAP MIDCAP. The success of the recent launches and the richness of the pipe for the year and the years to come confirm the broker’s very strong ‘buy’ recommendation on the file and its objective of 79 euros.
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