Commissioned Research: Starbreeze

Video game developer and publisher Starbreeze stands poised to profit from the global gaming market.

Starbreeze has commissioned Nordea Markets to produce a research report with the aim of providing investors with quality research on the company.

Three quarters to payday – Updated 6 March 2018

The game is on

Once a niche form of entertainment, gaming has evolved into a rapidly growing industry that pulls in more revenue than the film and music industry. The global gaming market generates over USD 100bn in revenue a year, with a burgeoning player base of over two billion in 2017, many of whom are spending more on games than ever before. Video game developer and publisher Starbreeze stands poised to profit from this booming market thanks to the popular titles it has under its belt and its diversified business offering.

The chance to make a killing

We have confidence in Starbreeze’s record and upcoming game releases and see the company cashing in peak sales of SEK 2.6bn over our forecast period to 2021E. It will likely make a killing from the launch of the much-anticipated OVERKILL’s The Walking Dead, slated for autumn 2018, and here we expect it to shift nearly 8 million copies over the course of three years. We base our estimates on the performance of comparable game titles, franchise interest, previous sales record and market trends.

Raising its game

To combat the potential swings in earnings between major game releases, Starbreeze has broadened its operations, adding a publishing arm and investing in emerging technologies. Its games as a service approach and releases of downloadable content bolster its games’ lifetime and generate substantial revenue even years after the initial game launch. This predictable revenue stream helps to de-risk the business model and will likely improve Starbreeze’s earnings stability.


Based on our fundamental DCF approach and assuming a WACC of between 7.9-9.1%, we derive an equity value per share between SEK 13.8 and SEK 15.9. This implies a 2020E EV/EBIT between 5.4x-6.4x and 2020E P/E of 9.0x-10.3x.

Read the full report here.

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Conflict of interest

Readers of this document should note that Nordea Markets has received remuneration from the company mentioned in this document for the production of the marketing material. The remuneration is predetermined and is not dependent on the content. It is important to note that past performance is not indicative of future results. Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction. This document may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets.

Issuer review

This report has been reviewed, for the purpose of verification of fact or sequence of facts, by the issuer of the relevant financial instruments mentioned in the report prior to publication. The review has led to changes of facts in the report. Completion date: 12 March 2018, 09:55 CET

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