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KWS's CMD last week.
Overview of all services lines. The MDs of the recent acquisitions are particularly impressive c. 2hrs in.
More re Berenberg's upgrade:
"Berenberg ups Keywords Studios to 'buy'
Analysts at Berenberg raised their target price on video games industry outsourcer Keywords Studios from 1,400p to 1,700p and upped its rating on the firm from 'hold' to 'buy' on Tuesday, saying it was time to back a "multi-year winner".
Berenberg noted that 2019 was "a year of investment" for Keywords and while the spending put pressure on margins and earnings delivery in the near term, the analysts said they had always argued that Keywords was a multi-year winner.
The German bank highlighted that Keywords had delivered 15% organic growth in 2019, something it called "a very strong result" in what was a relatively weak year in terms of development for the games industry.
"Looking to 2020, the launch of the next-generation consoles and further development of streaming platforms, which we anticipate will drive an industry-wide acceleration in content generation and increased development spend, provide a strong demand backdrop," said Berenberg.
"Coupled with its significant increase in capacity during 2019, this means Keywords is well placed to deliver material growth in 2020 and beyond."
As a result, Berenberg said it was now time for a re-evaluation. With a very strong growth outlook, margin expectations sufficiently rebased and M&A likely to increase in the coming months, Berenberg also said it felt Keywords' outlook was "robust".
"We increase our FY 2020-22 EPS estimates by c5% as a result. With its valuation materially below historical levels and attractive versus its growth profile, we upgrade Keywords to 'buy'," said Berenberg."
The Capital Markets Day today as per this morning's RNS should give a further boost to sentiment:
"The event will provide an overview of the structural growth drivers of our market and opportunities for each of our service lines, including a number of case studies which illustrate the strength of our offering across two of our newer service lines, Game Development and Marketing Services."
And more on Berenberg's upgrade:
"Berenberg is much more keen on Keywords Studios, the for-hire video games studio rollup.
"2019 was a year of investment for Keywords Studios. While this put pressure on margins and earnings delivery in the near term (the reason for our downgrade to Hold in June 2019), we have always argued that Keywords is a multi-year winner. It is now time for a re-evaluation. With a very strong growth outlook, margin expectations sufficiently rebased and M&A likely to increase in the coming months, Keywords’ outlook is robust. We increase our FY 2020-22 EPS estimates by c5% as a result. With its valuation materially below historical levels and attractive versus its growth profile, we upgrade Keywords to Buy and increase our price target to 1,700p."
Berenberg have today raised their target price to 1700p (from 1400p) and say Buy:
Could there be any connection with one poster yesterday posting 4 times all with links to bullish reviews.
I enquired at the time if it was a pump n dump, but received no reply.
Yup true these are mere allegations I am not saying I am right based on rumors. Its more of concern that you have company doing great and then it looses 20% in matter of days and we are not talking about a resource based industry.
This is a it consultancy in peak of boom for it industry and if they were doing good that would have been reflected.
When you make allegations its best to supply facts.
So far this stock has grown revenues consistently, added to its clientele working with the top 25 developers.
They may have lost a contract as you allege, but , the market has more development work for them to win in the years ahead as the cycle ramps up.
With all shares there is risk we all decide the level we wish to take.
I think you are missing the point that it's peak of boom for all the it services. Checkout any known it share price and they are all doing good. I had before given a statement but can't repeat it as its against the community rules. There is a hidden issue here and I can think any short term gains are apparent
We had an institution selling down price wise creates the cascade as it is all demand and supply.
If you are looking at a two to three year time frame, investing in a company growing revenues at twenty percent, that services a sector at the heart of 5g and is platform and company neutral appears one hell of a buy.
Add to a point that you will not lose sleep over - around 10-15% of your portfolio at tops.
If fully topped up, sit tight as in six months this should be moving back up.
Its the old weighing and popularity contest analogy that Buffet uses.
I really cannot work out what is going on with the SP of this company, just 10 days ago it was at 1550+ and about to report excellent numbers - on the back of which you'd expect the SP to make a move up and over 1600. But no, for some reason (probably the fall-out from coronavirus in China infecting laptops and being spread around the internet due to gamers) the SP has nose-dived to under 1300. What has happened to wipe 20% of the value of the company in 10 days?
What a good job we do not all follow Jefferies then, each time they raised their forecast the stock dopped, it now only has to rise 50% to match their forecast.
Why doesn't that surprise me ?
Answer on a post card please Rivaldo
You state that "Trading statement ahead of expectations" as the title of your post.
If that is so why are the shares down over £1 today, or almost 8% lower ?
Surely this was not a "pump and dump" ?
I am curious as to why you made these posts with the stock dropping faster than a Ho's drawers?
The trading statement appeared encouraging, this stock always seems to sell off after good trading.
May hit 12 pound dead... Long term this company appears very solid around 24 times this years earnings.
Gaming company should be able to build from here... Just need it to stabilise, slowly accumulate.
New note from Edison, confirming that EBITDA and PBT were ahead of forecasts.
KWS have lots of headroom for much larger acquisitions than they've made recently - a decent-sized acquisition from existing facilities would bring the rating down very nicely:
"Although we expected strong growth in H219, FY19 revenue of €326m, reflecting 30% overall growth and 15% organic growth, represents a sparkling performance. EBITDA and PBT were ahead of forecast at €49.5m and €41.0m, respectively. Given the higher revenue base, we are revising our FY20 revenue estimate up by 4%, but prudently holding operating profit and PBT at previous levels as margins normalise through FY20.
We retain our view that Keywords remains strongly positioned as the only games service provider at a global scale. The company’s P/E rating (25.0x FY20e) reflects its leading market position, track record and potential, and should fall further as Keywords continues its buy-and-build strategy."
"Market leader in a growth industry
As management emphasised at the Montreal capital markets day (CMD), as well as strong industry growth (Newzoo forecasts 8.4% growth 2019–22), Keywords benefits from the growth of outsourcing and increasing market share as a market leader in a fragmented global industry. Growth is further boosted by M&A through Keywords’ successful buy-and-build strategy. With the next console transition in Q420, the medium-term growth outlook remains robust and next week’s London CMD will provide further insight into the opportunities for each of Keywords’ business lines."
With the stock down 5.55% today we must praise the lord that the profit was "nicely ahead" of Edisons forecast, heaven knows where the price would be if not !
Adjusted profit of EUR41m is nicely ahead of Edison's forecast EUR40.2m.
As are revenues of EUR326m, against the forecast EUR319m.
And more acquisitions are likely:
"We fully expect to make a number of selective acquisitions as we continue to build our global video games services platform and we are managing a strong acquisition pipeline as we enter 2020."
I sold some much higher up, but happy to hold the rest as this will be a continued winner over time imho.
More detail on the Jefferies upgrade:
"Keywords Studios receives Jefferies boost
The US broker lifted its price target for the stock, which it continues to rate 'buy'
Jefferies nudged up its price target for Keywords Studios PLC (LON:KWS), while repeating its ‘buy’ recommendation, saying the next trading statement should confirm double digit growth an “margin improvement”.
The US broker reckons the stock is worth 1,881p, up from 1,853p and 35% ahead of the current price of 1,391p.
“The market will wait to see acquisition spend inflect, but we're confident [Keywords’] opportunity-set and attractiveness has grown,” analyst Ken Rumph said in a note.
The company, valued at more than £900mln, supplies a range of technical services to computer games developers and publishers.
Some of the services it provides include art services, software engineering, audio services, functionality quality assurance (QA), localisation (enabling games to be published in several languages), localisation QA, and player support.
Among its clients are Sega, Nintendo, Google, Microsoft and Warner Bros.
Established in 1998 it now has studios in more than 42 locations in 20 countries across four continents.
Keywords employs a buy-and-build strategy and has been expanding rapidly since its first acquisition in 2014."
Jefferies have today raised their target price to 1881p and say Buy:
Unfortunately looks like an institution selling down two £4 million sales.
There were some big sells last couple of days. The company is performing well so this should right itself.
Plenty of strong results ahead in the gaming sector. Just keep to a point that you are not losing sleep over.
I hope it does break through 1550 and keep going.
One of the directors sold 500,000 shares at 1540 last April, so I'm hoping that there's nobody on the BoD going to do the same again.
Price firming up at the 15.50 point.
There was a 90k buy today at that point. Been some sells but considering today has been a tough one this has shown good strength so far.
Breaks the resistance price could move quickly up.
Two more significant adds by Liontrust last two days.
Some nice block buys coming through right now 362k and 160 odd k.
Added a little myself and will add more if we get some further pullback to £14. They see it strong and I agree.
Where it is now is where Liontrust increased their position at.
This is the safest way to play Gaming as they are doing the development for 25 of the top 27 publishing houses.
The spends are increasing as is the technical difficulty of the work, bodes well for us.
Will look to add further as we are in the right area to add.