| UBI.PA | 9.35 |
Investment Thesis:
Ubisoft Entertainment (Ubisoft) is a leading videogame developer and publisher with several top franchises including the Tom Clancy series (Splinter Cell, Ghost Recon Rainbow Six, etc.), Rayman, Assassin's Creed, Imagine and Petz. Ubisoft is uniquely positioned among its peers as a low-cost developer due to having part of its infrastructure in low-cost development areas, namely Asia, Eastern Europe and Eastern Canada. This has helped it navigate through spiraling costs this cycle, which have decimated profits for many publishers. Ubisoft also has a significant footprint in casual games with successes on Nintendo DS and Wii. These games have generated substantial profits largely elusive to other third-party publishers that have struggled to find their own success. For these reasons, we believe that the stock is undervalued relative to its growth potential and represents an attractive risk-to-reward ratio.
Microsoft presented its Keynote today at E3
Conclusion:
Modest Positive for ATVI, ERTS, THQI, TTWO, UBI. We believe Microsoft’s new technology code-named Natal (see details below) is a potential important addition to the 360 platform that will at least enhance it as a multimedia and casual game device. The further expansion of the casual games business is positive for the third-party publishers, especially because they should be better leveraged to the expansion because Microsoft isn’t as competitive with casual gamers. To the extent that Natal eventually enhances hard-core games it could offer another reason for consumers to choose video games over other forms of entertainment.
Event:
Ubisoft (UBI.FR, Outperform) reported full year results. It reported sales results and gave its F10 forecast on April 29th. Call @ 9:15 AM PST, 212-444-0181, code 6749225
Details:
F2009
F2010E
Conclusion:
Neutral. No big surprises. Reiterated its F10 targets. F10 street estimates will likely be unchanged tomorrow
UBI.FR - May 27th, 2009 — 9:06am