On Thursday, Deutsche Bank (ETR:DBKGn) analyst upgraded shares of Frontier Developments PLC (FDEV:LN) (OTC: FRRDF) from Sell to Hold, adjusting the price target upward to GBP3.00 from GBP2.00. The adjustment follows the company's announcement that it anticipates reporting fiscal year 2024 revenues of approximately GBP89 million. This figure surpasses both the company's previous guidance of 'at least GBP85 million' and Deutsche Bank's own forecast of around GBP85 million.
The positive revision in Frontier Developments' revenue outlook is attributed to strong performance in the second half of the fiscal year, largely driven by its existing game portfolio. Notably, the release of Planet Zoo: Console Edition and several key promotional campaigns targeting the back catalogue were significant contributors to the company's financial results.
The analyst noted that the outperformance relative to expectations was likely influenced by a particularly successful promotion on the Steam platform in May for Planet Coaster. This promotion appears to have played a crucial role in bolstering the company's sales figures beyond initial projections.
Frontier Developments' updated revenue guidance and the subsequent stock rating upgrade reflect the company's successful exploitation of its back catalogue of games. By leveraging key promotional periods and new game releases, Frontier Developments has managed to exceed its revenue targets and analyst expectations for the fiscal year.
This development has prompted Deutsche Bank to reassess the value and outlook of Frontier Developments' shares, culminating in a more optimistic perspective on the company's financial health and stock performance. The new price target of GBP3.00 represents a significant increase from the previous target, signaling a revised expectation of the company's market potential.
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