Citi ups Evolution to 'buy' on buyback, product pipeline

Evolution AB (publ)

29/11/2023 08:35

** Citigroup upgrades Evolution  EVOG.ST  to "buy" from
"neutral", citing "attractive cash returns potential" following
the Swedish online gaming company's new share buyback
    ** The broker sees the buyback as a turning point in
Evolution's capital allocation strategy, forecasting a total of
EUR 1.3 billion ($1.43 billion) in buybacks by the end of 2025,
including the EUR 400 million already announced
    ** This would raise 2025 EPS estimates by 3%, the broker
says
    ** It notes the company has released 116 games in 2023,
ahead of its own target of more than 100, and the Q4 pipeline
suggests a 43% increase YoY in game launches
    ** Citi also sees mid-term structural growth tailwinds due
to the company's product mix and defensive nature amid macro
uncertainty
    ** The broker raises the target price to SEK 1,350 from SEK
1,250, pointing to recent declines in interest rates and the
company's reduced share count
    ** Out of 16 analysts that cover the stock, 10 rate it
"strong buy" or "buy", five "hold" and one "sell" – LSEG

($1 = 0.9104 euros)

 (Reporting by Elsa Ohlen)
 ((elsa.ohlen@thomsonreuters.com))