The long-term investment case remains firmly intact for Keywords Studio despite some short-term volatility since the Irish video game industry services provider released its 2022 full-year results and comments around the outlook and broader market weakness, according to analysts at Liberum.
“With the shares trading on a CY23 P/E of 25x, a 33% discount to its five-year average, we believe the current share price offers good value,” analysts said in a note to clients.
The analysts noted the recent dip in the company’s shares came despite it reiterating its FY23E guidance and the trading year to date being in line with expectations.
They highlighted Keywords’ CEO Bertrand Bodson’s comments on the company’s Create division which he said was starting to take a more cautious approach to investment in new games at the beginning of the year.
“The shares suffered, in our view, on the belief that there is a lag effect on Keywords, and that the full impact from a lack of new titles has not been fully felt in Create and that this would have knock-on effects for the rest of the business”.
“Despite these slightly more cautious comments (which were largely foreshadowed in the announcements of the publishers themselves), we believe that Keywords remains in a very strong position, and we see share price weakness as an attractive buying opportunity for long-term shareholders.”
As such, the analysts stuck with a ‘Buy’ rating and a target price of 3,400p. Keywords shares were flat at 2,650p on Friday afternoon in London.
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