Berenberg hikes target price on Keywords Studios

Berenberg said Keywords Studios had delivered "a very robust" first-half performance in 2020, as it had expected, with the "scale and reliability" provided by the company during Covid-19 had driven its clients to deepen the group's integration into the development value chain.

The German bank highlighted that this was supported by the number of clients that use three or more services increasing from 108 to 124 over the last six months, something the analysts said "bodes well" for Keyword's mid-term growth.

"The video games industry is in rude health, so KWS will enter 2021 with a stronger mid-term growth outlook than before," said Berenberg, which also reiterated its 'buy' rating on the stock.

"We expect Keywords' addressable market to outgrow the video game segment (at a 7% compound annual growth rate) as developers continue to outsource a larger percentage of the development cycle.

Berenberg also reckons that Keywords' best-in-class end-to-end platform and geographical reach will allow it to capitalise on said growth in outsourced game development, organically win market share and outperform the market.