Ubisoft Entertainment (OTC:UBSFF, EPA:UBI), the video game publisher, reported a worse-than-expected decline in bookings for the full year just ended and combined with a poor outlook for 2024 this has knocked investors' confidence, analysts at Barclays PLC (LSE:BARC) believe.
The group reported an 18% decline in net bookings to €1.7bln in the 2022/23 financial year, whereas consensus was for a 14.5% drop.
Barclays, which had predicted an 11% drop, reduced its 2024 net bookings and operating income outlook for Ubisoft by 3% and 4% respectively.
The UK bank said the drop in its forecast was “not dramatically lower” than Ubisoft’s unchanged guidance of operating income reaching €400mln.
Ubisoft reported an underlying loss of €500mln for the 2023 financial year.
Looking forward, the video game company faces a challenging year and Barclays sees 2024’s success as being “reliant on the delivery of AAA games in the second half.”
The group has five big releases planned for the upcoming financial year including a new Assassin's Creed instalment and a game based on the Avatar film franchise.
Barclays noted that the first quarter wouldn’t see any big video game releases for Ubisoft, as July and August are “unusual times to launch”, and instead expect the first offering in September.
“With the latter part of December and most of January also periods when games are rarely released, we believe that leaves 5.5 months in 2024 when the company will need to release 5 AAA games,” Barclays said.
The bank added that while this is possible, it does see some risks in further AAA delays, something it argues is “not good for the market's confidence”.
Barclays continues to rate Ubisoft “equal weight” but has lowered its share price target from €23.25 to €22.20.
Ubisoft opened trading on Wednesday at €25.60.