Keywords Studios PLC (AIM:KWS, OTC:KYYWF) has demonstrated its resilient and diversified business model through its full-year results for 2023, reckon analysts at Shore Capital Markets.
The company achieved a revenue increase of 13% year-on-year to €780m, with organic growth contributing approximately 9% of this increase, excluding a 3% impact from foreign exchange fluctuations and US strikes.
“Against an unfavourable backdrop, we view this growth as admirable, and even more so with slightly above guidance adjusted operating profit of €122m, margin of 15.6%,” said Shore Cap.
Looking forward, Shore Capital has adjusted its organic growth expectation for 2024 from 9% to 8%, anticipating improvements as the year progresses, supported by a recovering market and increased content demand.
Analysts said: “We would expect the growth rate to improve throughout the year, driven by backdrop improvements and content appetite returns including workload relating to last year's creative strikes.”
On valuation, Shore Capital believes that the current market valuation does not fully reflect the quality and leading position of Keywords Studios in a structurally growing market.
The firm highlights Keywords Studios' trading multiples, EV/EBITDA around 8x and PER around 12x for FY24F, as undervalued.
Shore Cap maintains a ‘buy’ rating on Keywords Studios stock.