Ubisoft: symbolic rebound after a dark week

(CercleFinance.com) - Ubisoft is attempting a fragile rebound of almost 0.
2% on Friday, in a bid to turn the corner on a dismal week that has seen it return to stock market lows of over ten years.

Barring a major change in trend, the stock is heading for a decline of over 20% for the week as a whole, having already fallen by 14% the previous week.

Since the end of August, analysts and investors have been concerned about the sluggish start made by the video game group's new title, 'Star Wars Outlaws', among critics and users alike.

In a research note published at the beginning of the week, Cantor Fitzgerald analysts downgraded their recommendation on the stock from "neutral" to "light", with a price target reduced from 25 to 17.6 euros.

In its study, the American broker explains that it has a "bad feeling" about the French group's situation, judging that "Star Wars Outlaws" is well on the way to disappointing market expectations.

"With an environment that promises to be much more competitive in the 2025/2026 financial year, the task looks even more complicated for the group", warns the broker.

However, Charles-Louis Planade, an analyst at TP ICAP Midcap and a connoisseur of the company, believes that the situation is not as dramatic as it seems, and could even represent an opportunity.

"Ubisoft's history, like that of its sector, is marked by a very high degree of cyclicality", reminds the professional in a note published this morning.

Twice since its stock market launch in 1997, the group has been declared close to the end", he adds, referring in particular to the failures of the games Ruse, Hawx and Splinter Cell HD Trilogy.

"Both times, it has recovered in dazzling fashion, offering exceptional returns to those who were able to seize the opportunity", adds the specialist.

Charles-Louis Planade points out that the main contributor to the group's sales (65% in total) and operating income remains its "back-catalogue", i.e. its games that have already been released.

In this respect, the analyst stresses that the back-catalogue has recently demonstrated its very good health, while highlighting the stakes linked to the release of the main game of the year, the latest installment of Assassin's Creed, due for release on November 12.

While TP ICAP Midcap reiterates its buy recommendation on the stock, it has reduced its target price from €50 to €30, which still shows potential for growth of around 150%.

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