Keywords Studios PLC (LON:KWS) shares jumped on Tuesday helped by an upgrade to ‘buy’ from ‘hold’ by Berenberg, which thinks the launch of next-generation consoles will boost demand for the firm's products in 2020.
The German bank's analysts also hiked their price target for Keyword to 1,700p from 1,288p, noting that the firm - a technical service provider to the games industry - is “well placed” to deliver “material growth” in 2020 and beyond.
READ: Keywords Studios touts revenue and profit growth despite “light year” for video game industry
According to the Berenberg analysts, mergers and acquisitions (M&A) activity for the group is set to increase in the near term as those deals that were paused in the second half of 2019 are back on the cards in 2020.
Plus, they noted that the AIM-listed company delivered 15% organic growth in 2019, which they deemed “a very strong result in what was a relatively weak year” for the industry.
“We have always argued that Keywords is a multi-year winner,” the analysts said in a note to clients.
“With a very strong growth outlook, margin expectations sufficiently rebased and M&A likely to increase in the coming months, Keywords’ outlook is robust,” they added.
Keyword shares were 12% higher at 1,440.52p on Tuesday morning.