After more than doubling during the pandemic, along with most of its video game sector peers, shares in Team17 Group PLC (AIM:TM17) have dropped by almost a third so far in 2022.
This, suggested analysts at Berenberg, offered investors with a medium and long-term outlook an opportunity to “start building their wish list” of companies to buy in the sector, as share prices for the likes of Team17 and Keywords Studios presented “a rare opportunity to buy diversified growth which has historically traded at a significant premium to the market”.
Despite many M&A deals in the sector in recent years, the analysts said the video game industry remains highly fragmented and with significant scope for further consolidation.
In January Team17 completed an £80mln fundraise to pay for the acquisition of simulation games developer Astragon Entertainment, which generated €26mln of revenue and underlying profits of €5.7mln its previous full year.
Earlier in the same month, the publisher of indie games and ‘edutainment announced a pair of new acquisitions, Hell Let Loose and The Label, while also sharing the good news that full year revenue and earnings (adjusted EBTIDA) will be ahead of its prior expectations and ahead of 2020.
That month was a busy one for the sector, with Keywords Studios PLC (AIM:KWS, OTC:KYYWF) having also nudged financial guidance higher for the second time in as many months.
The technical and creative services provider to the video games industry said revenue is expected to be around €512mln and adjusted profit before tax at roughly €86mln.
Keywords said it expects costs to rise again, alongside further investment in its platform and people, but had ample net cash of around €103mln in the bank at year-end.
Demand for its services was said to have remained high during the year, driven by the buoyant video games and content creations markets and the continued trend in the industry towards external service provision, with new chief executive Bertrand Bodson expecting trading momentum to continue in 2022.
Significant announcements on Wednesday 30 March
Final results: Equals Group PLC (AIM:EQLS) (Equals Group PLC (AIM:EQLS)), Gulf Keystone Petroleum PLC, Keywords Studios PLC (Keywords Studios PLC (AIM:KWS, OTC:KYYWF), Keywords Studios PLC (AIM:KWS, OTC:KYYWF)), Michelmersh Brick Holdings, Strix Group PLC (AIM:KETL) (Strix Group PLC (AIM:KETL)), Team17 Group PLC (Team17 Group PLC (AIM:TM17))
AGMs: Brunner Investment Trust (LSE:BUT) (Brunner Investment Trust (LSE:BUT)) PLC, Mediazest PLC (AIM:MDZ) (Mediazest PLC (AIM:MDZ)), Oxford BioDynamics PLC (AIM:OBD) (Oxford BioDynamics PLC (AIM:OBD)), Power Metal Resources PLC (AIM:POW) (Power Metal Resources PLC (AIM:POW)), Sureserve Group PLC (AIM:SUR) (Sureserve Group PLC (AIM:SUR))
Economic announcements: Gross Domestic Product (US), ADP Payrolls (US) Personal Consumption Expenditures (US), Crude Oil Inventories (US)