Benchmark Co. analyst Mike Hickey has maintained their neutral stance on 0NVL stock, giving a Hold rating yesterday.
Mike Hickey’s rating is based on a combination of strategic and financial factors impacting Ubisoft Entertainment. The company has initiated a significant transformation by creating a new subsidiary focused on its key franchises, with Tencent investing €1.16 billion for a minority stake. This move is intended to enhance Ubisoft’s operational agility and financial flexibility, but it also introduces complexities and execution risks.
While the investment strengthens Ubisoft’s balance sheet and provides a valuation uplift, there are concerns about unresolved cultural issues and the lack of a defined leadership team for the new entity. Additionally, the absence of transparency in royalty terms and segment-level financial disclosures makes it challenging to predict the impact on profitability. The transaction, while promising in terms of liquidity, does not address immediate operational challenges or improve game release quality, leading to a cautious Hold rating.
In another report released yesterday, Bernstein also maintained a Hold rating on the stock with a €10.10 price target.