In online entertainment, MS still prefers music over video games
11/09/2024 07:14
** Within online entertainment, Morgan Stanley continues to
prefer music over video games, with the former being
"dramatically undermonetised" and heading for a re-pricing
cycle, and the latter having a generally bearish backdrop
** MS says Universal Music UMG.AS ("overweight") is well
placed to capitalise on strong structural growth in music, with
margin accretion and improving FCF conversion
** It however cuts UMG's PT by 6.5% to EUR 29, flagging the
still uncertain timing around a subscription growth
re-acceleration and looking for further colour on what the label
sees as longer-term opportunities
** UMG holds a Capital Markets Day on Sept. 17
** Within gaming, it retains a relative preference for
Ubisoft UBIP.PA ("equal-weight") over CD Projekt CDR.WA
("underweight") given the wide disparity in valuation
** "We see a large opportunity for Ubisoft as it attempts to
pivot its business towards a higher quality business mix, but
limited evidence of delivery," MS says, pointing to recent
disappointing games performance
** It cuts Ubisoft's PT by 36.5% to EUR 20, implying good
upside but seeing little short-term prospects of re-rating
(Reporting by Piotr Lipinski)
((piotr.lipinski@tr.com))