On Friday, Stifel financial firm adjusted its price target on Team17 Group Plc (TM17:LN) (OTC: TSVNF) shares, a video game company known for its focus on indie games. The new target is set at GBP2.50, increased from the previous GBP2.25. Despite the change in price target, Stifel has decided to maintain its Hold rating on the stock.
The revision comes after Stifel's analysis of Team17's strategic shift towards indie games in the UK market. The firm anticipates that this move could significantly boost the company's profit margins in the medium to long term. However, they also recognize that fiscal year 2024 is a transitional period for Team17.
Stifel has revised upward its revenue forecast for Team17 for fiscal year 2024 by 8% in response to the company's performance exceeding expectations in fiscal year 2023. Nevertheless, the firm's estimates for EBITDA remain unchanged.
Stifel also predicts that capital expenditures (capex) will peak in fiscal year 2024, but anticipates a decline in capex as a percentage of sales starting from fiscal year 2025, reflecting Team17's strategic adjustments.
The year has begun on a strong note for Team17, and Stifel has expressed increased confidence in the company's ability to grow its gross margins. This optimism persists even though there is an expected shift towards third-party intellectual property (3P IP) and an anticipated increase in capital expenditures.
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