As the industry matures, outsourcing will be a more central component of every project - and ancillary services provider Keywords has advantages over peers in scale, technology and reputation, said the bank, though it adds that this strong story does not come cheap on a 34x 2022E P/E and 22x 2022E EV/EBITDA ratio.
Covid-19 has been a net headwind in 2020 with disruption to some functions, though Barclays expect 10% organic growth.
If 'opening up' of the world puts pressure on engagement with video games, that should not impact Keywords: growth should accelerate in 2021, it adds, as other industry players face a tough comp.
“We believe M&A is a good thing for Keywords, and there will be plenty more.“
This combination of underlying forecast momentum and M&A can maintain good share price performance adds the bank, which has a target price of 2,950p and ‘overweight’ investment recommendation.
Shares are 2,612p valuing the group at £1.93bn.