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

Sales and EBIT weaker in Q3

Long-term value, but limited near-term upside

September was a bit softer than expected

New CK3 expansion off to a good start

Paradox Interactive (Buy, TP: SEK240.00) - Sector-leading FCF growth s...

We believe the market is increasingly willing to look past a 2024 plagued by cancellations and postponements and focus on the core portfolio and return to earnings growth for 2025e. While we have lowered our 2025e EBIT by 5%, we have increased our 2025–2026e FCF by 5–8% to account for the improving capex profile. We reiterate our BUY and SEK240 target price ahead of the Q3 results.

Market share down slightly in August

Paradox Interactive AB: 1 director

A director at Paradox Interactive AB bought 2,000 shares at 138.350SEK and the significance rating of the trade was 56/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two year...

Momentum is turning

Streamlining initiatives bearing fruit. Growth momentum to improve in Q3. Strengthened conviction in BUY case, TP to SEK 210 (200).

Paradox Interactive (Buy, TP: SEK240.00) - Sensing a turning point

Q2 EBIT was c20% above consensus and our forecast, adjusted for the previously announced SEK208m write-down of ‘Life by You’. Green shoots for ‘Cities: Skylines 2’ was a key positive, as was the 28% YOY growth in FCF thanks to more disciplined capex. Following a weak share-price trend YTD, we reiterate our BUY and have raised our target price to SEK240 (230), having increased our underlying EBIT forecasts slightly.

Adj. EBIT +11% vs ABGSC, strong FCF

Stable market shares in June

Market share down y-o-y on tough comps but stable on a sequential underlying basis. Cons looks reasonable; positive momentum for Cities.

We might have seen a turning point for Cities

Q2 to be a soft quarter; downside to consensus H2'24 estimates. But Cities trend is more important, and should improve from here. We reiterate BUY, TP maintained at SEK 200, 16-11x EBIT '25e-'26e

Life by You cancelled and written off

Paradox Interactive (Buy, TP: SEK230.00) - Re-building confidence

We have lowered our target price to SEK230 (260) but reiterate our BUY after a 12% cut to our 2024e EBIT after the postponement of ‘Life By You’ and still-soft new games sales for ‘CS2’. We expect a more eventful H2, including several key releases and DLCs to drive better earnings growth momentum. In our view, the share price weakness continues to create an attractive buying opportunity.

Weaker May Steam sales, ~5% off Q2 ests.

According to data from the leading PC and console platforms Steam and PlayStation, Paradox delivered a significantly lower market share in May compared to last year.

CS2 console edition likely delayed again

Life by You delayed (again)