Translation: Original published in Finnish on 10/13/2025 at 7:00 am EET.

We have removed FBC: Firebreak from our forecasts for the coming years and assume Remedy will wind down the game during next year. The game was practically priced out of the stock already, as Friday's closing price is only slightly lower (-3.5%) than at the time of our update published on September 24, when we noted that the stock was already pricing in the game’s shutdown. Following the profit warning, sentiment towards the stock may remain sour in the short term, but we expect the news flow to improve over the next year. We estimate that the key major game releases for Remedy's investment story (Max Payne and especially Control 2) will be released in 2026 and 2027. We see a good probability of success for both games, and if this materializes, the stock has significant potential from current levels. We reiterate our Buy recommendation and revise our target price to EUR 17.0 (was EUR 18.0).

Weak sales of FBC: Firebreak and write-down of development costs on the background of the profit warning

Remedy issued a profit warning on Friday. Due to weak sales of FBC: Firebreak, the company lowered its long-term sales forecast for the game. As a result, the company will record a non-cash impairment of 14.9 MEUR, covering most of the game's capitalized development costs and allocated acquired publishing and distribution rights. Remedy now estimates that revenue will grow from the previous year and EBIT will be negative and decline from the previous year. Previously, the company still guided for a positive EBIT for this year. After FBC: Firebreak's unsuccessful launch, hopes were pinned on the first major update on September 29, which aimed to turn the game around. The update did not bring the desired boost, and for example, Steam player counts have remained anemic after the update. The game's continued weak performance is also reflected in the preliminary Q3 data, according to which Remedy's revenue was 12.2 MEUR (our estimate 16.1 MEUR) and EBITDA 0.7 MEUR (our estimate 2.8 MEUR). The write-down naturally pushed Q3 EBIT (-16.4 MEUR) deep into the red.

FBC: Firebreak removed from estimates

We have removed assumptions regarding FBC: Firebreak's future game sales from our forecast model starting from Q4'25. We expect the game to generate an additional 4 MEUR in revenue between Q4'25 and Q2'26 in the form of B2B payments from Sony and Microsoft. We assume Remedy will adjust its cost structure to reflect the weak performance of FBC: Firebreak. This inevitably means a reduction in the game team, and we expect Remedy's headcount to decrease in the coming quarters. Overall, the cancellation of the game significantly lowered revenue and EBITDA forecasts for the coming years. However, the game's significance in Remedy's investment story was minor compared to upcoming major single-player projects. Thus, shelving the game does not materially change Remedy's long-term potential.

Valuation is 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 6.6x) is attractive. The long-term potential is also indicated by the value of the baseline scenario of the DCF model (EUR 21.3). However, the model is very sensitive to the success of future games due to the fixed cost structure and self-publishing. For Remedy's share, the most crucial factor for value creation 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.