Berenberg says AI fears around Keyword Studios 'overdone'

Berenberg analysts sounded a confident note on Keyword Studios, even as they slashed their target price on the company's shares from 3,450.0p to 2,120.0p.

In particular, they attributed Keyword's current valuation, the lowest since it listed, to fears around Artificial Intelligence, which they labelled 'overdone'.

"We believe that delivery throughout 2024-25 will help reassure investors in this regard," they said.

"Supplemented with M&A, we believe that KWS can still deliver a more than 20% EPS CAGR through the cycle."

Furthermore, they believed that the Irish video game industry services outfit's first half results, which were published on 12 September, were "largely already known".

As for the US entertainment industry strikes, the 'fly in the ointment' as they put it, they expected them to be more of a timing issue which would turn into a tailwind in 2024 once resolved.

Hence their decision to keep their recommendation at 'buy'.