Numis cuts Frontier Developments to 'sell', sees risk of capital raise

Cited among the above were underperformance across the company's portfolio in December, "issues maintaining momentum" for its F1 game, mixed reviews for the F1 franchise and the possibility of softer consumer spend going forwards.

Thus, Frontier's sales were seen slipping from £100m to £98m in fiscal year 2024 followed by 13% growth in fiscal year 2025 on the back of two major releases.

Furthermore, spending on research and development was expected to result in a FY24 operating loss of £2.4m.

That compared to management's guidance for margins on an earnings before interest and tax basis in the low single digits.

All told, the analysts were anticipating a need to raise capita over the next 18 months.

"However, considering recent issues with execution of new releases, an ageing back catalogue and uncertainty over reception to future F1 games, we see risk to the downside of revised guidance.

"Although future developments may improve confidence in the outlook, based on the group's current position we see a negative risk-reward profile."