Vox Markets Logo

Berenberg raises target price on Frontier Developments

12:59, 8th May 2024

Analysts at Berenberg hiked their target price on video game business Frontier Developments Plc   Follow | FDEV from 170.0p to 300.0p on Wednesday, stating the group's strategy was "showing signs of promise".
Berenberg said its 'hold' recommendation on Frontier Developments wass premised on low return on investment on new titles, something the group was looking to address through a strategy to focus on creative management simulation titles and better cost control.

"The company's trading update on 7 May provided early signs that the strategy should pay off," said Berenberg. "While the better-than-expected net cash position removes the balance sheet risk, with the valuation at a premium to peers and the next major catalyst not until the release of the next CMS title in November, the shares are likely to lack direction, in our view."

The German bank stated that in order for it to turn more positive on the shares it must await details and data on Frontier's upcoming CMS title.

"Following the trading update, we update estimates and our price target increases to 300.0p accordingly. The shares trade on FY26 EV/sales of 1.0x and EV/EBIT of 24.4x, on our estimates, which is a premium to other UK publishers."





Reporting by Iain Gilbert at Sharecast.com

Stock Chart | FDEV

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.