Zeus Capital reiterated its Buy recommendation on Frontier Developments (LON: FDEV) with a 620 pence price target, arguing the UK video game developer’s shares offer good value following a second guidance upgrade for its fiscal year ending May 2026.
A pre-close trading update from Frontier lifted full-year revenue guidance to £103 million and adjusted operating profit to £16 million, against Zeus Capital’s prior forecasts of £100 million and £11 million, respectively.
Analyst Lorne Daniel said the beat was driven by strong second-half performance from Jurassic World Evolution 3, which has outperformed its predecessor in revenue terms.
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The company flagged delays to further content for the game, attributing the hold-up to factors “beyond Frontier’s control,” with community speculation pointing to a broader embargo on Jurassic franchise content ahead of a wider announcement.
Zeus Capital is leaving fiscal 2027 forecasts unchanged pending further details expected at a post-year-end update on June 10.
The analyst highlighted a further boost to profitability from the transition between UK tax credit regimes, with the new Video Games Expenditure Credit scheme providing an uplift on intellectual property costs not available under the previous regime, delivering a permanent annual cash benefit that is particularly meaningful in Jurassic-heavy years.
Looking ahead, Zeus Capital believes fiscal 2027 should benefit from the sequel to Planet Zoo, Frontier’s most successful individual title to date. With shares trading at just 6 times fiscal 2027 estimated enterprise value-to-EBITDA, Daniel said the stock deserves a “significant premium to peers” and has fallen well below fair value.
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