(BFM Bourse) – The Stifel bank raised its opinion on Tuesday on the video game publisher citing both the catalog of releases for the next fiscal year and the attractive valuation of the group.
Ubisoft remains a stock in which confidence remains fragile. The group is preparing to publish, next week, its results for its entire financial year ended last March, a financial year which proved to be rich in releases. Among these are the latest installments of the “Prince of Persia” and “Assassin’s Creed” series as well as the games “Avatar: Frontiers of Pandora” and “Skull and Bones”, a piracy simulation which had been postponed many times.
Will Ubisoft meet its profitability objective, namely an operating profit in non-IFRS data of 400 million euros? The answer will be given on May 15. UBS, at the end of April, was counting on a slightly lower figure, of 387 million euros, while the consensus cited by the Swiss bank is at 394 million euros.
Deutsche Bank, for its part, had retained an operating profit of 390 million euros and judged, in mid-April, that given the current weakness of the action, the market had probably already anticipated a slight failure on this objective. UBS notes, for its part, that investors are now directing their attention to the outlook for the 2024-2025 financial year.
This also seems to be the case for Stifel, which went from “hold” to “buy” on Ubisoft on Monday evening, while increasing its price target to 28 euros compared to 26 euros previously. This increase in recommendation also affects Ubisoft shares which rose 3.8% at the start of the afternoon this Tuesday, after having exceeded 5% during the morning.
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Two promising games
Stifel cites in particular the “improved visibility” on the release catalog for the financial year which will end in March 2025, with “two of the most anticipated titles of the 2024 calendar year, Star Wars Outlaws and Assassin’s Creed codename Red”.
“Star Wars Outlaws” is a game obviously taken from the “Star Wars” film franchise and its first images last year made a strong impression on the video game press. The release of the title is scheduled for August 30. The game allows you to play as an outlaw in the Star Wars universe and seems to be akin to a sort of GTA. The game promises (obviously) space combat.
“Assassin’s Creed codename Red”, for its part, will take place in feudal Japan and should be released by the end of 2024-beginning of 2025, according to our colleagues at Tech&Co. This game will constitute “the next part of what is the largest and (in our opinion) the most important franchise of Ubisoft”, underlines Stifel.
The bank notes that these flagship games will arrive while promising releases within the sector as a whole are missing, which could allow Ubisoft to “outperform”.
The other argument put forward by Stifel to justify its purchase advice remains Ubisoft’s starving valuation. The stock trades at 11.7 times expected earnings per share for the financial year ending in 2025, close to its 20-year historical lows (the range being between 9.9 times and 51.3 times earnings per share). action), notes Stifel, while Ubisoft’s listed competitors display an average close to 20.
“While we have been critical of Ubisoft in recent years and believe a downgrade is warranted, the magnitude of the gap compared to its historical performance and that of other video game groups seems too great to us and suggests a more favorable reward-risk dynamic on the upside, in our view,” concludes Stifel.
Julien Marion – ©2024 BFM Bourse
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