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On Friday, Deutsche Bank (ETR:DBKGn) analyst George Brown revised the price target for Embracer Group AB (EMBRACb:ST) (OTC:THQQF) stock, decreasing it to SEK 1.10 from the previous SEK 1.35. Despite this adjustment, the firm has chosen to maintain a Hold rating on the company’s shares.
The change follows Embracer Group’s announcement of their financial outlook for fiscal year 2026, which anticipates sales to be "slightly above" the SEK 22.4 billion recorded for fiscal year 2025, with adjusted EBIT expected to remain stable year-over-year at SEK 3.3 billion. This projection falls short of consensus estimates by 8%. The company’s Q4 performance was bolstered by the successful launch of " Kingdom (TADAWUL:4280) Come: Deliverance II" in February 2025, which sold 3 million units and contributed to a 7% increase in Q4 sales and a 15% rise in adjusted EBIT compared to consensus.
However, Embracer has indicated a cautious forecast for the next fiscal year due to game delays, with only two AAA titles, "Killing Floor 3" and "Marvel 1943: Rise of Hydra," scheduled for release. As a result, the market may not see a more dynamic stock situation until fiscal years 2027-2028, when nine AAA titles are planned for release. The company also cautioned that one or two of these titles could be postponed to fiscal year 2029.
Embracer Group, which operates predominantly in the digital space, is expected to face a tariff impact of approximately 2% on its adjusted EBIT. This impact will primarily affect the Entertainment and Services segment due to its role in the global distribution of physical video games.
In addition to the financial guidance, Embracer reiterated its plans to spin out its subsidiary, Coffee Stain, by the end of the calendar year 2025. The intended initial public offering (IPO) will take place on the Nasdaq First North Growth Market.
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