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One of the main points raised by Jefferies to justify this upgrade is Ubisoft's changing monetization strategy, which is increasingly turning towards recurring revenues through subscriptions. In January, Ubisoft rebranded its subscription service, marking a strategic shift towards a more stable revenue model. This change is expected to provide substantial financial benefits by stabilizing revenues, increasing customer engagement, and expanding their market reach.
Jefferies also highlights the strength of Ubisoft's game pipeline for the 2025 fiscal year, which relies on proven intellectual properties. Notable upcoming titles include "Star Wars Outlaws" and "Assassin's Creed Shadows." These releases are expected to play a crucial role in Ubisoft's financial performance, with significant sales forecasts for these games.
Furthermore, Jefferies analysts believe that Ubisoft is currently undervalued compared to its peers and its own historical trading. The bank sees several potential catalysts that could trigger a revaluation of the stock, including the release of Ubisoft+ subscription growth figures, the launch of new AAA games, and the integration of Activision Blizzard (NASDAQ:
ATVI)'s cloud games into the Ubisoft+ service.
Comparing the Ubisoft+ subscription model to other services like Microsoft's (NASDAQ:
MSFT) Game Pass, Sony 's (NYSE:
SONY) PS Plus, Spotify (NYSE:
SPOT), and Netflix (NASDAQ:
NFLX), Jefferies concludes that Ubisoft+'s profitability could improve. This is especially true since, unlike its competitors, Ubisoft does not have to bear significant recurring costs to renew content licenses, as it already owns most of its catalog.
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