DnB Markets - Embracer Group (EMBRAC B) Embracer Group (Buy, TP: SEK165.00) - The game of unlocking more value

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DnB Markets

Martin Arnell

EUR 88.15 For Business Accounts Only

Embracer Group (Buy, TP: SEK165.00) - The game of unlocking more value

We reiterate our BUY but have cut our target price to SEK165 (240), mirroring the continued operations after the Asmodee spin-off and Easybrain divestment. We have raised our underlying (pro forma) 2025/26e adj. EBIT by 7%, partly due to solid PC/Console trends (e.g. success of KCD2). Improving FCF, net cash and more initiatives to unlock shareholder value more than offset a mixed near-term earnings outlook for H1 2025/26e.

14/02/2025 1 EN

Underlying

Embracer Group

Embracer Group AB, formerly THQ Nordic AB is a Sweden-based company engaged in the computer games development. The Company focuses on acquiring, developing and publishing personal computer (PC) and console games for Xbox and PlayStation platforms. The Company's game portfolio consists of owned franchises intellectual property (IP) and published titles, including Saints Row, Goat Simulator, Dead Island, Darksiders, Metro, MX vs ATV, Kingdoms of Amalur, TimeSplitters, Satisfactory and Wreckfest, among others. It offers games through various distribution channels, including digital platforms, such as Steam, PlayStation Store and Xbox Live, as well as gaming conventions, and global retailers, such as Walmart, GameStop and Amazon. The Company has around 18 internal game development studios and operates in more than 40 countries.

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SE0013121589 Nasdaq Nordic Stockholm Sweden

Provider

DnB Markets

DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.

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Analysts

Martin Arnell

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Embracer Group (Buy, TP: SEK42.00) - Spin-offs set to unlock value

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Embracer Group (Buy, TP: SEK42.00) - Set to improve during the year

Q1 saw Embracer miss our adj. EBIT expectation in a quiet release quarter for PC/Console. Key title Kingdom Come: Deliverance 2 now has a firm release date, moved from Q3 to Q4, that together with typical seasonality in e.g. Tabletop, implies an H2-heavy year. We have cut our 2024/25e adj. EBIT by ~4% to reflect the Q1 results, Q2 guidance, and release calendar. We have lowered our target price to SEK42 (45), but reiterate our BUY as we like the cash flow improvement story and coming spin-offs (Asmodee CMD set for Q3 2024/25e).

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May 9, 2025 May 9, 2025 1 EN

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SpareBank 1 Helgeland (Hold, TP: NOK167.00) - Softer margin, but lower costs

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Embracer Group (Buy, TP: SEK165.00) - The game of unlocking more value

Embracer Group (Buy, TP: SEK42.00) - Spin-offs set to unlock value

Embracer Group (Buy, TP: SEK42.00) - Set to improve during the year

Airthings (No_rec, TP: NOK) - Recommendation and target price withdrawn

SpareBank 1 Helgeland (Hold, TP: NOK167.00) - Softer margin, but lower costs

Smartoptics (Buy, TP: NOK27.00) - We remain optimistic

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