It's shaping up to be a tough period for Ubisoft Entertainment SA (EPA:UBI), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at €2.1b, statutory earnings missed forecasts by an incredible 56%, coming in at just €0.65 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Ubisoft Entertainment from 17 analysts is for revenues of €2.53b in 2023 which, if met, would be a meaningful 19% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 111% to €1.35. Yet prior to the latest earnings, the analysts had been anticipated revenues of €2.45b and earnings per share (EPS) of €1.67 in 2023. While next year's revenue estimates increased, there was also a substantial drop in EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
The consensus price target was unchanged at €56.60, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Ubisoft Entertainment, with the most bullish analyst valuing it at €119 and the most bearish at €31.00 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Ubisoft Entertainment's rate of growth is expected to accelerate meaningfully, with the forecast 19% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 5.8% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Ubisoft Entertainment is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at €56.60, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Ubisoft Entertainment going out to 2025, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 1 warning sign for Ubisoft Entertainment you should know about.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Ubisoft Entertainment SA produce, publishes, and distributes video games for consoles, PC, smartphones, and tablets in both physical and digital formats in Europe, North America, and internationally.
Good value with reasonable growth potential.