Berenberg raises target price on Team17 following 'first half to remember'

Berenberg said Team17 had delivered "another better-than-expected result" and stated it now believes that management will target full-year revenues of £77.0m-82.0m and underlying earnings of £28.5m-£30.5m.

The German bank highlighted that this marks a profit upgrade of almost 30% - at the top end versus its former estimates.

"While we knew that Team17 had many tailwinds, the guidance is higher than we expected at this stage in the year, given that it has released only five games year-to-date, with six more still to come," said Berenberg.

However, the analysts stated they were "cautious" about extrapolating this type of growth into perpetuity as they expect a portion of the increase in revenues was a result of Downing Street's Covid-19 stay-at-home orders.

"Team17 trades on circa 40 times one-year forward price-to-earnings ratio. While expensive, this is in line with other premium diversified players, such as Paradox and Embracer," concluded the analysts, which also acknowledged that the group had a sector-leading free cash flow yield.