On Friday, Citi adjusted its outlook on Ubisoft Entertainment SA, the video game company known for popular titles such as Assassin's Creed. The firm lowered its price target to €30.00 from the previous €45.00. Despite the decrease in the price target, Citi continues to recommend a Buy rating for the company's stock.
The price target revision comes after Ubisoft announced a reduction in its financial guidance for the fiscal year 2025. This announcement has confirmed Citi's concerns about the underperformance of the company's Star Wars game. Additionally, Ubisoft's decision to revise the launch strategy for Assassin's Creed Shadows, while potentially beneficial in the long run, is expected to have a negative impact on the company's short-term financials.
Ubisoft's recent moves include initiating a review of its operating model to enhance efficiency. Citi views this as a positive step that could lead to cost savings. However, due to the current lack of detailed information, the firm is unable to confidently incorporate these potential savings into its financial models.
The revised financial outlook has led to a significant downgrade in the expected earnings for 2026, exceeding 30%. Nevertheless, Citi notes that Ubisoft's stock price has already seen a substantial decline of around 45% over the past three months, which may reflect the market's anticipation of these challenges.
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