Games Workshop Group PLC (LSE:GAW) shares marauded 6.75% higher to 16,440p after Jefferies raised its price target, highlighting the company’s long-term growth prospects despite near-term profit pressures.
Analyst Andrew Wade, who hiked its price target to 18,300p from 11,850p and reiterated a 'buy' rating, said that while the release of Space Marine 2 (SM2) is expected to weigh on earnings in the 2026 financial year, he sees a reacceleration to double-digit profit growth in 2027.
SM2, a PlayStation, Xbox and PC video game set in the Warhammer 40,000 universe, developed under licence, garnered much of the attention in the 2025 results, however, Wade was struck by the performance of the core business – representing over 90% of revenues. This delivered "another year of outstanding performance". Core revenues rose 16% at constant currencies and operating profit grew 26%.
Looking to 2026, Wade is forecasting PBT of £238 million, ahead of the consensus forecast of £228 million, and views his estimate as "solidly underpinned", with core growth below the usual 10-15%, no repeat of the SM2 effect and only 50% recovery of tariff headwinds.
Longer term, the analyst sees major upside from Amazon's Warhammer 40k TV series, currently expected in 2028, as well as a broader opportunity to expand the franchise’s mass-market reach.
"The success of SM2 has demonstrated the potential for the Warhammer universes to reach a more mass-market customer – and to convert those customers into miniature-buying hobbyists."
Despite trading at around 26x FY27 earnings, "not optically cheap", the analyst said Games Workshop remains “an asset of rare quality” with a strong track record, a clear market leadership position, consistent execution, and room for further upgrades.