Citi starts coverage of Playtech at 'buy'
Citi initiated coverage of Playtech Plc on Wednesday at 'buy' with a 355p price target, which it said implies around 34% upside.
Playtech is a B2B-focused content and services provider to the online gambling industry.
Citi said it believes the shares are undervalued, even when adjusting for a potential adverse outcome of the Evolution litigation. Sweden's Evolution has accused Playtech of hiring Black Cube, an Israeli private intelligence firm, to investigate it.
It announced in October last year that one of Playtech's subsidiaries had commissioned Black Cube to prepare a 2021 report that contained "highly inflammatory and knowingly false claims" about it.
"We see strong potential for Americas growth (FY25/26e Americas Revenue forecasts +4%/+8% above Visible Alpha consensus), with notable opportunity in the US as it invests in its Live product & capacity," Citi said.
It noted that 81% of Playtech's 1H25 B2B revenues were generated in regulated markets and said it believes greater earnings visibility and lower unregulated market risk warrant a premium to peers.
"Our FY25/26e group adjusted EBITDA forecasts are +6%/+6% versus Visible Alpha consensus," Citi said.
"Key risks include an adverse Evolution case outcome, regulatory tightening, slower US regulation, IP protection and cyber security," it added.
At 1100 GMT, the shares were up 2.3% at 272p.
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