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On Monday, Citi updated its position on Paradox Interactive AB (PDX:SS) (OTC: PRXXF), increasing the price target to SEK190.00 from the previous SEK150.00, while keeping a Neutral rating on the stock. The adjustment reflects the firm's recognition of Paradox's status as a leading independent video game developer and publisher.
According to the Citi analyst, Paradox Interactive stands out for its growth and returns within the management/strategy game genre. The company's focused strategy and core competencies have earned it a significant premium in the market, trading at approximately 25 times prospective P/E, compared to its peers at around 14 times.
The analyst pointed out that while Paradox enjoys a strong market position, there is some uncertainty looming over the next 12 months due to the upcoming launch of "Vampire: The Masquerade – Bloodlines 2." The success or failure of this game is not expected to have a major long-term impact on Paradox's prospects, as it is the last project initiated under the company's previous strategy.
The report highlighted the potential risks and rewards associated with the new game launch, suggesting that the outcomes could influence consensus forecasts which anticipate some level of success. Based on this balance of potential outcomes, the Neutral rating on Paradox Interactive's stock has been reaffirmed by Citi.
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