CD Projekt: Beginning of the path to recovery (BUY - transfer of coverage)
We transfer coverage of CD Projekt (CDR), keeping our BUY rating and setting our new 12M price target (PT) at PLN 297 (down from PLN 304), offering 23% upside. While we believe this is just the beginning of the long recovery path ahead of CDR, following the troubled Cyberpunk 2077 (CP77) release, our view is that, after the 43% share price decline in the past three months, the potential short-term triggers outweigh the risks already. We see a number of short-term catalysts that should help the stock, which we detail below. On our forecasts, CDR is trading at a 2021E P/E of 24.0x, a 23% discount vs. its global peers.CD Projekt is a holding company of the CD PROJEKT Capital Group which conducts its operations in two activity segments: CD PROJEKT RED and GOG.com. CD PROJEKT RED's activities cover the creation and publication of videogames, licensing the associated distribution rights and manufacturing tie-in products which exploit the commercial appeal of brands owned by Co. The activities of GOG Ltd. involve digital distribution of videogames via Co.'s proprietary GOG.com distribution platform, on the basis of contracts signed by GOG Ltd. with producers, IPR holders and external publishers. The platform enables customers to purchase games, remit payment and download game files to their personal devices.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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