Kepler Cheuvreux sets Embracer stock target at SEK132, holds rating

On Tuesday, Kepler Cheuvreux analyst Rasmus Engberg reinstated coverage on Embracer Group AB (EMBRACb:ST) (OTC: THQQF) with a Hold rating and a price target of SEK 132. According to InvestingPro analysis, the company appears slightly undervalued at its current market cap of $2.65 billion, with a price-to-book ratio of just 0.57. Engberg highlighted the company's recent strong performance, driven by the spinoff of Asmodee and the successful launch of " Kingdom (TADAWUL:4280) Come: Deliverance 2." This success is reflected in InvestingPro data, showing impressive returns of 30.6% over the past year and strong momentum in recent months. Engberg noted the potential for a similar positive impact in the future, with the anticipated spinoff of Coffee Stain and the launch of two AAA titles slated for the end of the fiscal year. For deeper insights into Embracer's performance metrics and future potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Engberg's commentary underscores the company's strategic moves and their contributions to recent successes. The spinoff of Asmodee and the new game release have been pivotal in bolstering Embracer's market position. Looking forward, the planned spinoff of Coffee Stain and upcoming game titles are expected to create additional value for the company.

Despite the optimism surrounding these strategic initiatives, Engberg expressed caution regarding the stock's long-term potential. He pointed out that while there is significant upside based on the 2026/27 earnings projections, the distant time frame is a concern in the gaming industry, known for its frequent delays. This caution is reflected in the Hold rating. InvestingPro data supports this balanced view, showing strong free cash flow yield but noting that the company wasn't profitable over the last twelve months, though analysts predict profitability this year.

The price target of SEK 132 set by Kepler Cheuvreux represents Engberg's valuation of the company based on the current and expected future performance. Embracer's shares have shown resilience and growth potential, yet the analyst's outlook remains measured due to the inherent uncertainties in the gaming industry's timeline.

Engberg's analysis of Embracer Group concludes with a cautious but observant stance on the company's stock, acknowledging both its recent achievements and the challenges it may face in the gaming industry's dynamic environment. The Hold rating and SEK 132 price target encapsulate this balanced perspective.

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