Shares in Ubisoft (UBIP.PA) fell 20% on Thursday after the French video game maker warned on revenue and postponed the release of its game “Skull and Bones”, prompting analysts to cut their estimates and price targets.
Late on Wednesday, Ubisoft said that it was increasing its writedown estimate to 500 million euros ($538 million) from 400 million and cutting its full-year revenue target after ending 2022 with weaker-than-expected sales.
Ubisoft cited the deteriorating economy, marked by lower spending on non-essential goods.
JP Morgan analysts in a note cut their rating on Ubisoft to “neutral” from “overweight”, citing “a weakening macro, a challenging industry environment and the lack of visibility regarding the timing of releases and their potential success”.
Several analysts noted that another negative factor was a shift in the video game industry towards mega-brands and away from small and mid-tier games.
“We have felt for several years that Ubisoft was devoting far too much money towards non A-tier franchises (such as Skull & Bones)”….Macro or not, there is still plenty of room for big performance if you have the right product…Ubisoft clearly needs to refocus its efforts,” Cowen analysts wrote.
They reiterated their “market perform” rating on Ubisoft and cut their price target to 22 euros from 34 euros.
Morningstar analysts cut their fair value estimate on Ubisoft to 35 euros from 60 euros “to account for the revenue drop, lower top-line growth, and potential further game delay”
Ubisoft shares were down 19.48% at 19.38 euros as of 0808 GMT.