Handelsbanken reiterates its buy recommendation on gaming company Embracer, according to a recent analysis.
In its analysis, the bank writes that the fourth-quarter results show that Embracer is on the right track and that there is more value creation ahead through the spin-off of Coffee Stain, which is expected to be an important trigger for the share.
"Our view of the spin-off has improved, as it is now a focused PC/console business with strong margins of around 50 percent on adjusted EBIT. We estimate that the value could amount to approximately SEK 8.5 billion, or 15 times expected EBIT in 2025/26," writes Handelsbanken.
The target price is being lowered by SEK 10 to SEK 130 (140). The revision comes at the same time as the bank is lowering its EBIT estimates for Embracer by 4-14 percent for 2025/26 to 2027/28.
Embracer Group AB, formerly THQ Nordic AB is a Sweden-based company engaged in the computer games development. The Company focuses on acquiring, developing and publishing personal computer (PC) and console games for Xbox and PlayStation platforms. The Company's game portfolio consists of owned franchises intellectual property (IP) and published titles, including Saints Row, Goat Simulator, Dead Island, Darksiders, Metro, MX vs ATV, Kingdoms of Amalur, TimeSplitters, Satisfactory and Wreckfest, among others. It offers games through various distribution channels, including digital platforms, such as Steam, PlayStation Store and Xbox Live, as well as gaming conventions, and global retailers, such as Walmart, GameStop and Amazon. The Company has around 18 internal game development studios and operates in more than 40 countries.
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