“Ultimately, the answer is the next PUBG” ... Krafton price target cut to 290,000 won

[Financial News] MERITZ SECURITIES CO., LTD. lowered its price target for Krafton from 350,000 won to 290,000 won, citing the suspension of development on a new title and the company’s heavy reliance on existing games. It maintained its “Buy” rating.
Yi Hyo-jin, an analyst at MERITZ SECURITIES CO., LTD., said on the 13th, “Krafton’s consolidated revenue for the third quarter of this year is expected to rise 28.8% year over year to 1.121 trillion won, while operating profit is forecast to fall 15.6% to 294.2 billion won.”
The analyst explained, “PUBG’s performance is determined quarter by quarter depending on the timing of events,” adding that this was “the biggest reason for the slowdown in the third quarter despite strong earnings growth in the second quarter.” The analysis attributed the pressure on this year’s results to a high base from PUBG’s summer events, which were concentrated in the third quarter last year.
The decline in exchange rates is also weighing on earnings. Krafton holds substantial foreign-currency assets and benefited from favorable exchange-rate effects in the first half of this year, but the opposite effect is expected in the third quarter.
Plans for new releases have also become more uncertain. Krafton recently halted development of “PUBG: Black Budget.” The game had been presented as a major upcoming title since Krafton’s IPO, but its cancellation has also led to its exclusion from next year’s earnings outlook.
The analyst noted, “Over the past five years, Krafton has introduced a variety of upcoming titles and released one or two a year, but has failed to reduce its dependence on PUBG.” The analyst added, “Among the titles currently announced, there appears to be no new game that can be expected to deliver meaningful growth in 2027 beyond the existing PUBG.”
However, the outlook is that the potential for further declines is limited. The analyst said, “Krafton is actively pursuing shareholder returns, backed by ample cash and cash flow,” and forecast that “the potential for further declines will be limited.” She also added that earnings could improve, saying, “Growth is expected to accelerate in the fourth quarter, as the PC event schedule is similar to that of the third quarter last year.”

[email protected] Lim Sang-hyeok Reporter