Codemasters Group Holdings PLC (LON:CDM) has had its target price hiked to 436p from 390p by analysts at house broker Liberum, who said the company is “closing the valuation gap” with the rest of the video game sector following a strong start to its current year.
In a note on Tuesday, the broker also retained its ‘buy’ rating on the developer, saying the trading update highlighted “management’s successful expansion of the major F1 franchise” following good sales of the company’s F1 2020 game, which they added was “on track for a record year and materially above [their] forecast”.
READ: Codemasters jumps as it upgrades full year forecasts
“Today’s update highlights the potential of the F1 franchise (the company has grown it to over £50mln of annual revenue a couple of years faster than we expected) and the opportunity to develop and expand other franchises”, Liberum said.
As a result of the stronger trading, the broker also upped their revenue forecasts for the group’s 2021 financial year by 20% on the back of stronger F1 2020 sales, which are now estimated to be 50% above their original predictions thanks to “the success of the game development and continued player engagement post lockdown”.
Shares in Codemasters were up 5.1% at 396.1p in mid-morning trading.