Bank: Ubisoft hurt by delays

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Ubisoft, like most video games providers, is having a prosperous pandemic. Last week, it released its H1 numbers with revenue from sales up 8.5 per cent, and net bookings up 14.2 per cent.

Ubisoft has an impressive portfolio of game franchines including the Rayman, Assassin’s Creed and Far Cry franchises, and Tom Clancy games.

However, a report from investment bank Berenberg stays with “BUY” advice to clients and praises Ubisoft for its “impressive trends” but alerts investors that Ubisoft will suffer from short delays to two major new issues because of working from home issues and which prompted the bank to trim its revenue forecasts for the year for the gamer.

“Against the backdrop of last year’s execution issues, Watch Dogs: Legion has had a solid enough start but more importantly there are encouraging signs for the upcoming release of Assassin’s Creed (AC) Valhalla. The unfortunate reintroduction of lockdowns, a lack of material 2020 economic uncertainty and very strong interest in the next-generation consoles are all also supportive to near-term estimates. Combined, this suggests that on an underlying basis we are in a more reassuring position now than at the time of our last update. While cutting estimates, we believe a higher multiple is warranted and the net effect leads us to modestly increase our price target to €85.00 (from €80.00),” says the bank.

The bank says that Video games are by far the fastest growing segment of entertainment and Ubisoft is greatly benefitting, with traffic and engagement reaching record levels in H1. “Most importantly, ahead of the upcoming AC Valhalla release, the AC franchise is enjoying momentum that the company has never seen before, which bodes extremely well for that release. AC Odyssey witnessed very sharp increases in sell-through, daily player engagement and in-game revenues in Q2 compared with AC Origins, respectively growing over 200 percent, 250 per cent and 400 per cent on a like-for-like basis.”

The report adds: “However, the delay of Far Cry 6 and Rainbow Six Quarantine – two high-contribution games – into FY/2022 has a material impact on our FY/2021 estimates. Management commentary suggests that these games could come out in Q1/FY 2022 (ie just a few months late), which would mean limited loss of value. We still assume four releases in FY 2022, with two games pushed out of the year to make way for the two delayed games.”


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