The
stock jumped 9% at the open after the company on Tuesday
announced long-term plans for new games in its two core
franchises, the Witcher and Cyberpunk, and a new original game.
It also launched a share buyback for up to 100 million zlotys
($21 million).
"We see the goals announced by the company as ambitious and
their implementation will allow it to reach a new, much higher
level," BDM brokerage analysts wrote.
They flagged risks related to shifting from CD Projekt's
previous practice of focusing on one big-ticket game to
developing several projects simultaneously.
Credit Suisse analysts estimated in a note that if the new games
generated the same revenue over four years as the "Witcher 3:
Wild Hunt" had, its revenue forecasts for 2023-2030 would
increase by 4.6 billion zlotys to 17 billion zlotys.
WAITING GAME
CD Projekt released the first game in the Witcher medieval
fantasy franchise in 2007 and added another with "Cyberpunk
2077" in late 2020.
Its production cycle has usually taken four-to-five years.
"The announcement of the Witcher saga or a new IP gives hope for
a more expansive development in the future than previously
expected," Piotr Cieslak, managing director at Poland's Retail
Investors' Association told Reuters in an email.
He noted that multiple, simultaneous projects would likely come
with higher costs and shareholders would need to wait to see the
impact.
Credit Suisse analysts noted that adding about 400 staff, as CD
Projekt forms a new studio in North America, could increase
development costs by 50% as it pays higher U.S. salaries.
"This could lead to some sizeable near-term profit reductions,
in our view. The first positive impact on revenue might not be
until 2026," they wrote.
The stock, which has lost around 40% of its value so far this
year, trimmed earlier gains and was up around 2.4% at 110.96
zlotys as of 0918 GMT.
($1 = 4.8288 zlotys)
(Reporting by Anna Pruchnicka, Additional Reporting by Karol
Badohal, Editing by Barbara Lewis and Mark Potter)
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