DS Investment Securities has raised the target stock price for Pearl Abyss... Expectations for the new work "Red Desert" are soaring.

DS Investment Securities raised Pearl Abyss’s target stock price to 100k KRW on the 13th, as market expectations for its new work “Red Desert”’s box office performance and profitability improvement once again drew focus. The securities firm commented that its performance significantly exceeded market expectations, and the sales outlook for its core new titles has also improved to a higher level.

On the same day, DS Investment Securities raised Pearl Abyss’s target stock price from the current 90k KRW to 100k KRW, maintaining a “Buy” investment opinion. Researcher Choi Seong-ho explained that Pearl Abyss’s consolidated sales for the first quarter of this year were 328.5 billion KRW, with an operating profit of 212.1 billion KRW, greatly surpassing the market consensus expectations. This is not merely a temporary performance boost but is interpreted as the result of a joint adjustment process of cost structure and business portfolio.

Particularly, the part that market is paying attention to is the effect of restructuring loss-related subsidiaries. Pearl Abyss sold all shares of its Icelandic affiliate Penris Creation (formerly CCP Games), so from the first quarter of this year, the profits and losses of that entity have been excluded from consolidated performance. After removing the loss-making subsidiary, the profitability of the main business will become more clearly visible, which securities firms see as a positive change. From a corporate perspective, this can be expected to reflect the effects of divesting low-profitability businesses and focusing on core game development and services.

The company’s guidance (performance outlook) for the new work “Red Desert” also served as a background for the upward revision of the target stock price. Pearl Abyss projected annual sales of 879 billion to 975.4 billion KRW and operating profit of 487.6 billion to 572.6 billion KRW. DS Investment Securities considers this to be a reliable scenario based on estimated sales curves and believes its credibility is high. Additionally, the company has raised the expected sales volume of “Red Desert” to 9 million copies, even mentioning the possibility that sales may have already exceeded 6 million copies so far. In the gaming industry, the success or failure of a new title’s box office has a significant impact on performance and corporate value, and the focus of this assessment is that this core title’s market commerciality is stronger than expected.

However, the securities firm pointed out that the uncertainty of the new title’s release schedule remains a variable. This is because if the release of the game is delayed even slightly, concerns about a performance gap could intensify. Nevertheless, DS Investment Securities commented that the confirmed performance itself is difficult to deny. The further upward momentum for the stock price is listed as “Red Desert” DLC (downloadable content) and the potential public release of the next title “Dodge,” which may be launched within 2 to 3 years. Based on the closing price of 52,800 KRW on the 12th, Pearl Abyss’s stock price could potentially continue in the short term depending on the actual sales trend of “Red Desert,” subsequent content schedule, and the release speed of the next new title.