Remedy: Light is already peeking through the short-term gloom

Translation: Original published in Finnish on 09/24/2025 at 06:44 pm EEST 

We reiterate our EUR 18.0 target price for Remedy but update our recommendation to Buy (was Accumulate) due to the share price drop. On September 25, Remedy will release a major update to FBC: Firebreak, aiming to turn around the game after its unsuccessful release. In our opinion, the stock price has practically already priced in a scenario where the game does not recover. Thus, there is mainly room for potential positive surprises, although at the moment, pessimism regarding the game is fully justified. In the big picture, we see the following major game releases (Max Payne and especially Control 2) as key to Remedy's investment case, and if successful, the stock has significant upside potential from current levels. Thus, we see the risk/reward ratio as attractive for investors who believe in the success of these upcoming games.

If FBC: Firebreak does not recover, a profit warning is likely later this year

We've discussed the release and situation of FBC: Firebreak already in our Q2 update, and the situation has not changed in one way or another since then. Although Remedy lowered its expectations for Firebreak's performance after the release, the company reiterated its guidance in the Q2 report (revenue growth and positive EBIT). The company still has faith in a potential comeback of the game, with the first critical step being a major update to the game in September. Marketing activities surrounding the game will also increase then. The company published a blog post on September 24, partially revealing the new update, but more information will be provided on September 25. Faith in the game's potential is created by the fact that the basic gameplay experience is functional and enjoyable, especially for players who have invested more time in the game. The purpose of this update is to make the gaming experience enjoyable from the start. However, the task is not easy, and if unsuccessful, a profit warning toward the end of the year is likely. In Q3, however, Remedy has been running discount campaigns for its older games to celebrate the company's 30th anniversary. This somewhat supports short-term development, but is not enough on its own.

We make no changes to our estimates at this point. We currently expect revenue of 64.9 MEUR (+28%) and adjusted EBIT of 1.7 MEUR (H1'25: 0.8 MEUR) for 2025. In its strategy, Remedy aims for revenue of over 100 MEUR and an EBITDA margin of 30% by 2027. We believe that these are achievable, especially if the Control 2 release is successful.

We find the stock's valuation attractive, considering the potential of upcoming major game releases

We believe in Remedy’s ability to create multiple high-quality and successful games in the long term, and considering the growth and profitability potential this offers, the valuation of the share (2027e EV/EBITDA 5.6x) is highly attractive. The long-term potential is also indicated by the value of the baseline scenario of the DCF model (EUR 25.6). However, the model is very sensitive to the success of future games due to the fixed cost structure and self-publishing. In the short term, the stock's valuation does not yet receive support from earnings multiples, and FBC: Firebreak’s release fell significantly short of initial expectations. The game still has hopes of making a comeback, with the September update playing a very important role. Uncertainty related to the turnaround is currently weighing on Remedy's stock, and we believe the stock has practically already priced in a scenario where the game does not recover. Thus, if a positive surprise were to occur, the turnaround in the stock could be rapid, although at present, a pessimistic view regarding the game's future is justifiably prevalent. However, for Remedy's share value creation, the key factor is the successful release of Control 2, which we estimate is less than 2 years away. We believe that at some point in the next few years, Remedy's stock will begin to more accurately reflect the company's long-term potential as game projects move toward release.