UBI FP update -13.5% ABS, selling over-done, expecting short term recovery
While guidance disappointed despite the already low expectations – Now trading close to the 2019 lows at EUR 50-55
Short interest in UBI is around 16 days to cover – we expect to see some profit taking soon amongst those
ANR <GO> does not have a single broker with a target price below the current price – We expect analysts to start reiterating their buys soon
The investment community has punished UBI due to them having switched focus to high-end free to play and mobile games rather than AAA releases – we however believe that this over time will prove to be the right move in the market and is very much the trend as well
A UBI representative told Axios that “We are excited to be investing more in free-to-play experiences, however we want to clarify that this does not mean reducing our AAA offering.” As it plans to expand more into mobile games early 2022 which is expected to involve Assassin’s Creed
We continue to see the move as overdone from a valuation perspective we see a 20% upside to our DCF valuation and a 70% upside on a peer basis which highlights how UBI has been a laggard
TRADING CALL – BUY UBI FP into numbers, +15% upside short term, +50% long term
Monday • 10 May 2021 • 10:14
The stock has come all the way from EUR 85 to around EUR 60-65 since February’s guidance cut as analysts have cut projections which has left the stock around the March 2020 lows despite company being in the right industry in Covid times
We see the move as overdone and the current consensus as too conservative with only three launches set for next year, margins set at the same level as the February guidance cut and revenue growth set at a fairly conservative level
Potential upside catalyst tomorrow could be a more aggressive timeline for releases or added releases and revenue growth
From a valuation perspective we see a 10% upside to our DCF valuation and a 50% upside on a peer basis which highlights how UBI has been a laggard