A first look at EU5

Solid April, strong outlook

EU5 will be announced on 8 May

Paradox Interactive (Buy, TP: SEK240.00) - More releases ahead

We reiterate our BUY and SEK240 target price, having fine-tuned our forecast after the soft Q1 revenue due to few new releases. Looking ahead, we expect revenue and earnings growth to improve from new releases, and coupled with a more stable capex profile, we see healthy FCF growth for 2025e. Additionally, we believe Paradox is well positioned for rising shareholder distributions and more bolt-on M&A.

Earnings gain speed, valuation stuck in reverse

Minor miss, but overall solid, in a small quarter

Valuation now back at 5Y lows

Strong March, but some downside to cons

Paradox Interactive (Buy, TP: SEK240.00) - Sharp FX headwinds

We have lowered our 2025–2026e revenues by 10–12%, mainly reflecting the strong SEK. Our organic revenue growth assumptions are broadly unchanged, and the DLC bundles released in Q1 should drive strong cash flow and improved visibility for the rest of 2025. We reiterate our BUY, but have lowered our target price to SEK240 (260).

Sales +14% in Jan/Feb, March more uncertain

Paradox Interactive (Buy, TP: SEK260.00) - A return to form

Q4 saw a significant earnings beat, as Paradox released DLC for all its core franchises. While variability between quarters is set to continue, we believe the quarter showcased the company’s strong earnings power, and we see potential for positive revisions as the pipeline matures and DLC cadence increases. We reiterate our BUY and have raised our target price to SEK260 (250) reflecting our raised estimates.

Upside risk to H1'25e

Strong beat

Paradox Interactive (Buy, TP: SEK250.00) - Strong end to mixed 2024e

We believe the market has started to regain its confidence in Paradox, and see scope for further share price gains from positive earnings revisions. We have raised our 2024e EBIT by c4% to account for a strong Q4 release schedule, with several core portfolio DLCs along with limited marketing spending, and continue to like the improving FCF story. We reiterate our BUY and have raised our target price to SEK250 (240).

Positive risk/reward into the numbers

Positive trajectory and outlook for Q4

New records for HOI4 led strong Nov

October data indicate slight downside to Q4e

Paradox Interactive (Buy, TP: SEK240.00) - 2025–2026e FCF story in sig...

Q3 proved to be a fairly lacklustre event, but we believe investors are shifting focus towards material earnings and FCF improvements in 2025–2026. Continued capex reductions following cancelled projects together with a strong pipeline should drive a 2023–2026e FCF CAGR of 20%. We reiterate our BUY and SEK240 target price, with a 5% EBIT cut offset by our raised FCF.

Q3 reinforced the margin expansion story