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Investing.com - Nomura/Instinet downgraded Krafton Inc (KS:259960) from Buy to Neutral and slashed its price target to KRW360,000 from KRW550,000, representing a 36% reduction.
The downgrade follows Krafton’s weaker-than-expected second-quarter 2025 results, with revenue and operating profit missing consensus estimates by 6% and 13%, respectively. The disappointing performance was primarily driven by a sharp 20% quarter-over-quarter decline in mobile revenue.
Nomura cited fewer collaborations and a soft content cycle in PUBG as key factors behind the mobile revenue drop. The investment firm has cut its 2025 and 2026 earnings per share forecasts by 22% and 6%, respectively.
The rating change also reflects a reduction in Nomura’s target price-to-earnings multiple from 21x to 16x, aligning with Krafton’s average 12-month-forward multiple during the 2022-2023 mid-cycle. The stock currently trades at 17x 2025 forecasted earnings per share.
Krafton faces additional headwinds with the delay of Subnautica 2 to 2026 and postponed momentum for new intellectual properties, though potential upside could come from better-than-expected PUBG monetization through second-half collaborations with K-pop stars and luxury brands.
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