Analysts boost Games Workshop stock target price by £10

Analysts boost Games Workshop stock target price by £10 as tabletop games firm announces strong profit outlook

  • Games Workshop anticipates reporting at least £170m in annual pre-tax profits
  • The Nottingham-based firm also predicts core turnover will increase to £440m
  • Peel Hunt has lifted its target price for Games Workshop from 9,500p to 10,500p

Analysts have upgraded the target price for Games Workshop stock after the Warhammer maker said it expected profits to be at least £10million above forecasts.

The miniature wargames developer told investors on Wednesday that it anticipates reporting pre-tax profits of at least £170million for the 12 months ending 28 May, compared to Peel Hunt’s estimate of £160million.

Games Workshop now predicts core turnover will have risen by £53million to £440million, even though licensing income is set to dip slightly to £28million.

Earnings: Games Workshop anticipates reporting minimum pre-tax profits of £170million for the 12 months ending 28 May, compared to Peel Hunt’s estimate of £160million

Peel Hunt also forecasts another 5 per cent growth for the current year, supported by the tie-up with Amazon and the future arrival of new video games.

It has subsequently lifted its target price – an estimation of a firm’s future stock value – for Games Workshop from £95 to £105.

Games Workshop Group shares were the FTSE 250 Index’s second-best performer by late Wednesday afternoon, up 5.55 per cent, or £5.35, at £101.80.

The Nottingham-based company’s sales have soared since the Covid-19 pandemic provoked greater interest in tabletop board games among consumers who were forced to spend more time at home.

Its last full-year results showed revenue grew by 12.3 per cent to £414.8million thanks to more robust store demand and sales to third-party retailers offsetting a drop in online purchases.

Sales in the following six months rose to a record £226.6million, although this was below the group’s targets because of particularly poor trade in the US.

Profits also dropped to £83.6million as margins were impacted by higher staff salaries, materials costs and inventory investment to meet the increase in customer orders.

Yet soon afterwards, Games Workshop received an enormous boost when it struck an agreement in principle with retail giant Amazon to develop some of its intellectual property into film and television shows.

Former Superman actor Henry Cavill is reportedly lined up to play a leading role in a production based on the Warhammer 40,000 franchise, which had its tenth edition launched last week and is set for a full release on 24 June. 

Peel Hunt said the latest edition includes ‘reduced complexity to improve access for beginners and new and re-evaluated rules, which will be 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 planned for release sometime later this financial year.