CD Projekt: solid long-term prospects, but a long way to go (upgraded to HOLD)
We have upgraded CD Projekt (CDR) to HOLD (from Sell), and increased our 12M price target (PT) by 25%, to PLN 120 (implying a limited 7% upside). Our increased forecasts reflect the better-than-expected performance of Phantom Liberty, which is supportive of Cyberpunk sales as well. Despite the sound short-term earnings momentum, we expect two gap years in 2024-25E, with no AAA game releases. The long-term outlook appears promising, based on the strong Witcher IP, the improved perception of the Cyberpunk IP and the new IP to come (Hadar). We assume three AAA releases in 2026-27E only: Polaris, Sirius and The Witcher Remake. While it is still far too early to play the long-term horizon, we are willing to accept the 17% premium vs. its peers on the average 2023-26E P/E, due to its strong long-term potential.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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