In this equity research report analysts Viktor Holmgren and Melvin Rune take a closer look at Fractal Gaming a founder-led Swedish leading designer and manufacturer of premium PC hardware, including cases, cooling, power supplies, and accessories. Due to the shortage easing up, the industry is experiencing a turnaround with pent-up demand, which will benefit Fractal due to having a stronger brand than its peers. This is estimated to expand the Company ́s market share from 2.0% in 2022A to 3.1% in 2025E. A DCF, supported by a relative valuation, implying a target multiple of 8.9x EV/EBIT in 2024E, motivates a target price of 38.9 SEK and an upside of 15.5%. Investments highlights
Investments highlights
- Fractal’s strong brand makes them well positioned to capitalize on the increasing demand for upgrades, resulting in an estimated top-line growth with a 24.2% CAGR 2022A-2025E
- Capitalizing on the growing number of devoted gamers and the increasing demand for high-quality products, boosting market share from 2.0% in 2022A to 3.1% in 2025
- Fractal is expected to improve its EBITDA margin from 11.3% TTM to 19.9% in 2024E due to outsourcing production and an extension of their US tariff exception