Analysts raise Games Workshop share price target by £10 as table games company announces strong earnings outlook
- Games Workshop expects to report at least £170 million in annual pre-tax profits
- The Nottingham-based company also forecasts core sales to rise to £440m
- Peel Hunt has increased its target price for Games Workshop from 9,500p to 10,500p
Analysts have raised the target price for Games Workshop shares after the maker of Warhammer said earnings would come in at least £10m above forecasts.
The miniature wargame developer told investors on Wednesday it expects to report a pre-tax profit of at least £170 million for the 12 months ended May 28, compared to Peel Hunt’s estimate of £160 million.
Games Workshop now predicts that core revenue will be up £53m to £440m, even though license revenue will drop slightly to £28m.
Earnings: Games Workshop expects to report a minimum pre-tax profit of £170m for the 12 months ended May 28, compared to Peel Hunt’s estimate of £160m
Peel Hunt also forecasts another 5 percent growth for the current year, supported by the Amazon tie-up and the future arrival of new video games.
It subsequently raised its target price – an estimate of a company’s future share value – for Games Workshop from £95 to £105.
Games Workshop Group shares were the second best performer of the FTSE 250 Index by late Wednesday afternoon, up 5.55 per cent, or £5.35, to £101.80.
Sales for the Nottingham-based company have skyrocketed since the Covid-19 pandemic sparked increased interest in board games among consumers forced to spend more time at home.
The latest full-year results showed sales growing 12.3 per cent to £414.8 million, driven by higher in-store demand and sales to third-party retailers offsetting a decline in online purchases.
Turnover in the following six months rose to a record £226.6 million, although this was below the group’s targets due to particularly poor US trading.
Profit also fell to £83.6m as margins were impacted by higher staff salaries, material costs and inventory investments to meet the increase in customer orders.
But soon after, Games Workshop received a huge boost when it signed an agreement in principle with retail giant Amazon to develop some of its intellectual property into movie and television shows.
Former Superman actor Henry Cavill is reportedly lined up to star in a production based on the Warhammer 40,000 franchise, which launched its tenth edition last week and will be released in full on June 24.
Peel Hunt said the latest edition “features reduced complexity to improve beginner access and new and re-evaluated rules, which are free to download and easier to manage for both hobbyists and Games Workshop”.
In addition, the video games Warhammer: Age of Sigmar and Warhammer 40,000: Space Marine 2 are scheduled for release later this fiscal year.