Good fiscal Q1, but demanding valuation
UBI’s fiscal Q1 net bookings came in 6% above our estimate and 9% above the guidance, thanks to the digital segment and the back catalogue (notably Far Cry 5, launched at the very end of fiscal Q4). As Q1 is usually not a significant quarter for the industry, FY guidance has been logically reiterated. Visibility remains strong (the three AAA titles expected are established franchises). Management is confident that they can reach their FY 2018-19 targets, and we fully agree. For valuation reasons, we maintain our Sell recommendation and FV of EUR65 (we are unable to see any upside potential from the current share price). The stock is trading on a 2018-19e P/E of 39.9x, showing an unjustified premium of 35% relative to its US peers (Activision Blizzard, EA and Take-two).
Ubisoft Entertainment is an international independent developer, publisher & distributor of video games. Co. centers its business activities on developing, publishing & distributing video games for portable & home consoles, the PC, smartphones & tablets in both physical & online formats: high-definition with games for Xbox 360, PlayStation®3 & PC; casual with games for Nintendo®, KINECT & PlayStation®3 Move; and online for on-line games. Co.'s catalogue includes various types of games: Action/Adventure, Shooters, Sports, Strategy, Simulation, TV and Movie licenses, Games for everyone and Driving. Co.'s trademarks include Assassin's Creed®, Rainbow Six® Vegas 2, and Rayman Raving Rabids®.
Since 1996, Bryan, Garnier & Co has been growing with an absolute conviction that the investment banking landscape would experience a major revolution: most of the large local generalist banking groups will disappear to the benefit of a handful of global powerhouses, and an emerging group of independent, highly specialised boutique investment banks.
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