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Pachter: Ubisoft Still Undervalued Following F07 Earnings

Pachter: Ubisoft Still Undervalued Following F07 Earnings

May 29, 2007 | By Brandon Boyer




Following Ubisoft's earning report for fiscal 2007, Michael Pachter has raised fiscal 2008 sales guidance above company expectations from €800 million to €825 million ($1.08b to $1.11b) and maintained that the publisher is still "seriously undervalued."

Following its sales report published earlier in April, Ubisoft has posted fiscal 2007 profits of €40.5 million ($54.6 million), versus €11.9 million ($16 million) one year earlier.

In examining the results, Pachter said the company had a "stellar period of earnings growth" following its earlier reported strong sales, due to gains from an equity swap and lower interest expense, which saw "total other pre-tax financial income" of €21 million versus Webush's estimated €6 million.

Apart from the equity swap, major drivers of that other income included Ubisoft's minority stake in Gameloft, which Pachter expects is around €2 million per year.

Over 2008, Pachter believes that the publisher could see "core" sales grow to around €500 million, by extending its portfolio to new platforms, Tom Clancy series games to fall to €155 million in revenue due to the franchise release schedule, and its new casual game market to bring in €130 million.

Wedbush raised its fiscal 2008 sales estimates to €800 million to €825 million and fiscal 2009 estimates to €910 million to €975 million, adding, as he similarly said after the sales report, that shares in Ubisoft are "seriously undervalued, as the market does not appreciate the company's potential to grow faster than the market and deliver contribution margins in line with its peers."


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