Ubisoft at its lowest point, but could bounce back - BNP Paribas

Ubisoft Entertainment (EPA:UBIP ) has been under intense selling pressure for several days, losing more than 12% this week to settle at €13. This plunge, bringing it to its lowest level since 2014, comes despite the recent launch of "Star Wars Outlaws."

Analysts, such as those from BNP Paribas Exane, have downgraded the video game publisher's stock from "outperform" to "neutral" while lowering its target from €32 to €14.5, which amplifies the downward pressure. ⚠️Take advantage of INVESTINGPRO+ to find the best investment opportunities on the markets in France and elsewhere.⚠️ ▶ Click here to take advantage of the 1-year Pro+ subscription ▶Click here to take advantage of the 2-year Pro+ subscription

BNP Paribas revised its recommendation on Ubisoft due to disappointing results from several AAA games, such as Skull & Bones and Avatar: Frontiers of Pandora (OTC:PANDY ).

Moreover, the year 2025 looks particularly competitive with major releases like GTA 6, leading to reduced sales and profit forecasts for Ubisoft for the fiscal years 2025 and 2026.

BNP Paribas also expects a delay in the recovery of free cash flows, now anticipated for 2027. Ubisoft will face significant debt repayments by then, which could result in high costs due to its underwhelming operational performance.

According to InvestingPro's models, the stock could jump by 51% to reach a fair value of €19.49.

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Source: Investing.com