In a recent analysis, Kepler Cheuvreux has expressed a more optimistic outlook on Enad Global 7 AB (EG7), following the company’s strategic move to include the highly anticipated game, Mechwarrior 5: Clans, in the Xbox and PC Game Pass lineup. This agreement is seen as a pivotal development for the game development firm, which has faced scrutiny over its full-year guidance amidst a challenging market environment.
As of October 14, 2024, Kepler’s analysts have raised their earnings forecasts for EG7 by 10% for the current fiscal year, reflecting confidence in the potential sales boost from the Game Pass inclusion. The analysts noted that while this deal is expected to enhance fourth-quarter sales and earnings, it may come at the expense of future unit sales in 2025 and 2026. The immediate financial benefits from the upfront payment for the game are believed to outweigh the projected decline in unit sales over the next couple of years.
Despite the positive adjustments, Kepler’s new forecast remains slightly below EG7’s own full-year guidance, being just 4% off the company’s projections. However, when looking ahead to EBITDA targets for 2026, Kepler’s estimates are significantly more conservative, sitting 40% below EG7’s guidance. This discrepancy is attributed to uncertainties surrounding the launch of another game, H1Z1, which has not yet entered production as of August and therefore carries risks of delays.
Kepler has maintained a
