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On Friday, Kepler Cheuvreux adjusted its stance on Paradox Interactive AB (PDX:SS) (OTC: PRXXF), downgrading the stock from Buy to Hold and slightly reducing the price target to SEK225.00 from SEK228.00. The change in rating follows Paradox’s strong performance in the fourth quarter, which was bolstered by the release of content for five of its key video game franchises.
Kepler Cheuvreux analysts cited concerns that the robust fourth-quarter results might be due to the early recognition of revenue anticipated in 2025. They also noted that the first quarter of 2025 is expected to see only one significant release from Paradox. This forecast adjustment comes despite the company’s shares recently experiencing a substantial recovery, closing the gap with both the market and Kepler’s previous target price.
The firm’s decision to downgrade the rating was influenced by the stock’s recent performance, which aligned more closely with Kepler Cheuvreux’s target price. The analysts believe that the current share price reflects the market’s expectations and the company’s near-term prospects.
Kepler Cheuvreux’s earnings per share (EPS) forecasts for Paradox Interactive have remained largely unchanged. The minor adjustments made are primarily due to lower amortization expenses. However, the firm has reduced its cashflow forecasts for the company.
In summary, Kepler Cheuvreux’s revised outlook on Paradox Interactive reflects a more cautious stance, based on the timing of revenue recognition and a lighter release schedule in the near term, despite the company’s strong recent market performance.
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