More confidence needed on Ubisoft's ability to seize opportunities - MS
15/09/2023 07:22
** Morgan Stanley starts coverage of Ubisoft UBIP.PA at
"equal-weight", seeking more confidence on the game maker's
ability to seize opportunities
** "Ubisoft has sizeable opportunities on revenue ... and
cost, and is culturally/technologically well placed for
potential AI windfall" - MS
** Ubisoft seems to be "increasingly willing" to invest in
third-party intellectual property like Avatar, Star Wars, MS
says
** Such games could provide for a more solid back-catalogue
contribution, a more predictable release cadence, and a more
consistent earnings profile, it adds
** Other major areas of self-help include expanding
geographical mix, particularly expansion into Asia, and
increasing live services revenues, the broker says
** Additionally, MS sees mgmt's cost reduction target of 200
mln euros ($213 mln) as "plausible", and a tangible cost action
as a key stock driver over the next 18 months
** The above notwithstanding, Ubisoft's "recent track record
is weak and the market is highly competitive, leaving us on the
sidelines for now," MS says
** The Assassin's Creed maker remains committed to
internally-generated effort around free-to-play games, while
peers have been "more pragmatic" on M&A, while it is possible
consumer tastes move away from its historical strength of vast
open-world games
($1 = 0.9385 euros)
(Reporting by Piotr Lipinski)
((piotr.lipinski@tr.com))