JPM cuts Evolution on lingering Asia woes, stricter EU rules

Evolution AB (publ)

03/10/2025 12:45

** J.P.Morgan downgrades B2B online casino services company Evolution EVOG.ST to "underweight" from "neutral" and cuts PT by 19% to SEK 675 pointing to lasting issues in Asia and stricter European regulations as key obstacles for future revenue growth

** Evolution's growth in Asia is being hurt by cyber attacks, expected to ease by 2025, but now seem likely to continue, the broker says

** Additional pressures come from government crackdowns in unregulated markets, it says

** In Europe, more countries are tightening rules so players can only access locally licensed sites, which JPM sees limits Evolution's potential revenue

** Channelization is falling in markets like Germany and the Netherlands, reducing player activity on legal sites and weighing on Evolution's regulated business, it notes

** JPM expects EBITDA margins to shrink by an average of 45 basis points (bps) each year in the 2026-2030 period, pressured by declining revenue contribution from Asia, growing costs in the U.S., and spending to fight cyber attacks and comply with regulations

** Out of 17 analysts that cover the company's stock, eight rate it "strong buy"/"buy", five rate "hold", and four - "sell", according to LSEG data

 (Reporting by Marta Frackowiak)

 ((marta.frackowiak@thomsonreuters.com))