Several new titles announced

Improved pipeline for ’19e/’20e as a whole

Q3’19e/’20e looks especially promising

E3 offered five brand new titles from THQ
E3, arguably one of the most important annual events for the PC and console gaming industry, concluded on 13 June. THQ offered news on both brand-new titles and previously announced games. During the week leading up to E3, THQ announced three brand-new titles in well-established franchises: Darksiders Genesis, Destroy All Humans, and SpongeBob SquarePants: Battle for Bikini Bottom – Rehydrated. All three titles belong to well-known franchises, with several prequels that have generated strong sales figures in the fast, along with favourable Metacritic rankings. Darksiders Genesis is set to be released at the end of 2019, most likely in Nov-Dec alongside Google Stadia, which Genesis will be compatible with. Destroy All Humans and the SpongeBob remake are believed to be slated for a 2020 release, and though not confirmed, we would not be surprised to see them released in Q4/19/20e. Coffee Stain studios also revealed two brand-new publishing titles: Songs of Conquest and Midnight Ghost Hunt. Both look interesting, but neither are part of a previously established franchise.

Estimates for ’19e/’20e intact
In our latest report, we lowered our estimates for ’19e/’20e. Following E3 2019, we do not find reason to alter them further. If anything, we have gained further confidence in our estimates, especially as the pipeline for Q3’19e/’20e has solidified. Meanwhile the pipelines for Q1’19e/’20e and Q2’19e/’20e remain weaker than usual, which is reflected in our estimates.

EV/EBITA 19.5x for ’19e, 25% above selected peers
At the current share price, THQ is trading at an EV/EBITA multiple of 19.5x for ’19e, based on our current estimates. This is approximately 25% above the selected peer group based on FactSet consensus.

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