LONDON (ShareCast) - (Sharecast News) - Analysts at ShoreCap upgraded their recommendation for shares of Frontier Developments from 'hold' to 'buy', citing the shares' valuation and progress on its shift back to its core strength.
The upgrade followed a trading update from the video game developer and publisher that same morning.

In it, the company said that sales during the initial launch of its Planet Zoo game had beaten those for the Planet Coaster console launch.

Frontier Developments also announced the sale of the publishing rights to RollerCoaster Tycoon 3 to Atari for $7m.

That led ShoreCap to bump up its estimate for the outfit's full-year 2024 earnings before interest, taxes, depreciation and amortisation from -£19m to -£15m.

Frontier's board also reiterated guidance for full-year sales of £80-95m.

ShoreCap was still anticipating revenues of only £83m but said that it now saw scope for revenues in the middle of that range if sales momentum kept up.

"Given the low EV/Sales multiple, less than 1x, and considering the initial progress as the Group's focus returns to its core strength within creative management simulation games which could see incremental revenue contributions to our forecasts, we upgrade our recommendation from Hold to Buy."

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