[Click e-Stock] "Share-Price Recovery Possible Starting Next Year... Krafton Target Price Cut"

KB Securities lowered its target price for Krafton from 350,000 won to 300,000 won. It expects the company’s share-price momentum to recover starting in 2027.

According to KB Securities on October 8, the target-price cut reflects a 14% reduction in its 12-month forward earnings-per-share (EPS) forecast from its previous estimate, amid a lack of new-title momentum. “PUBG revenue is declining faster than expected, while the release schedules for some new titles have also been adjusted,” said Lee Ji-eun, an analyst at KB Securities. Krafton’s share price stood at 200,000 won on October 7.

Krafton’s third-quarter revenue is estimated at 1.0705 trillion won and operating profit at 282.2 billion won, both below market consensus.

“In addition to slowing traffic, the company will have no major third-quarter updates, unlike in previous years. As a result, revenue is expected to fall by about 18% even compared with the second quarter, which is typically an off-season,” Lee said. “The impact of the ‘Subnautica 2’ launch is also fading, so its contribution to earnings will be minimal.”

“Although there are few major esports events in the third quarter, rising game-server costs will add to the burden,” she said, adding that “marketing expenses are also expected to increase due to participation in events such as Gamescom.”

Earnings momentum in the second half of the year is also expected to be limited. Unlike in previous years, content updates are concentrated in the fourth quarter, but traffic is typically weak during this seasonally slow period, making a meaningful earnings rebound difficult to achieve.

The lack of momentum from new titles was also flagged, particularly after the highly anticipated “Black Budget” project was discontinued. “Meaningful share-price momentum may emerge from the first quarter of 2027, the peak season, and the 10th-anniversary event in March, and later as the release of the new title ‘Palworld Mobile’ draws closer,” Lee said.

This content was produced with the assistance of AI translation services.