Deutsche Bank has initiated coverage of Keywords Studios PLC (AIM:KWS, OTC:KYYWF), a technical and creative services provider to the global video games industry, with a hold rating and 2,700p price target.
George Brown at Deutsche Bank suggested that while the current downturn in video games may shrink the pool of projects that Keywords draws from in the near term, the impact in 2023 should be limited.
“We believe 2023 should be protected by high visibility given the high proportion of confirmed revenue and continued oversubscription of Keywords' services given the dearth of capacity within the industry, said Brown.
“Furthermore, over the next year, as major publishers attempt to scale back fixed cost, we should see an accelerated shift towards outsourcing that should disproportionately benefit tier-1 outsourcing companies such as Keywords.
Keywords’ share price was changing hands at 2,752p at the close of Friday’s trading session on March 31.