Keywords Studios PLC (LON:KWS) “will come out the other side of [coronavirus] stronger than it was” according to analysts at Berenberg, who on Monday hiked their target price for the firm to 1,700p from 1,600p and retained their ‘buy’ rating.
In a note, the bank said it now expected sales for the video game services firm to grow 9% year-on-year in 2021, adding that the company’s £100mln fundraising last week was “a shrewd move to accelerate market consolidation at, very likely, favourable valuations”.
WATCH: Keywords Studios in strong position to continue acquisition strategy following £100mln raise
As a result, Berenberg said they expected Keywords to deploy the £100mln over the next 18 months, forecasting that the acquisition strategy will add around €19mln to their 2021 earnings (EBIT) estimate.
The broker also highlighted that the firm said it was “past the trough” and, with capacity improving, they expected revenues to “increase incrementally” as the year progressed.
“With Keywords noting that demand for its services has grown throughout the pandemic, particularly as competitors struggle, suggests to us that the company will come out the other side of [coronavirus] stronger than it was”, the bank said.
Shares in Keywords surged 10.5% to 1,652p in late-morning trading.