By Investing.com – Analysts at BTIG have started covering Lottomatica Group SpA (BIT:LTMC) with a “Buy” rating and a target price of €17 euros, approximately 53.4% above the €11.27 per share closing price on Friday, October 25.
Before this update, the betting company’s stock boasted 11 “Buy” ratings and an average target price of €15.62 per share, with an upside of over 38% from the current value.
Lottomatica can grow thanks to online betting
In particular, according to BTIG, an industry leader like Lottomatica could take advantage of the shift in betting towards online channels.
Italy, in fact, as noted by the experts, “has the largest gambling market in Europe with ~€15B in combined offline/online play, but the lowest online penetration, and fairly deep competitive moats for scaled omnichannel operators like Lottomatica.”
In Italy, currently, only 30% of the business is digital, compared to other mature markets where the percentage of online betting ranges between 60% and 80%.
However, the advantages over offline gaming for both operators and users are numerous, and are driving this direction.
“Online migration is also a win/win for both operators and players because of higher win rates for players and better economics for operators, due to higher frequency and lower taxes,” BTIG notes, expecting a consolidation of the duopoly in Italy between Lottomatica and Flutter Entertainment PLC (LON:FLTRF), the Irish company that owns Sisal and Snai in Italy.
In particular, analysts expect that the renewal of online gaming concessions in 2025, currently being discussed at the state level, should bring another 15% of the market towards the two main operators.
Lottomatica still little known to US investors
“Despite the opportunities and growth we see ahead,” explains the broker, “shares of Lottomatica are priced at a discount relative to our outlook. We think that’s a function of awareness, as Lottomatica probably hasn’t been on the radar for many US investors, as well as low free float (BTIGe ~30% freely traded) and nominal ADTV (€7-8M daily). Time and execution should naturally alleviate those constraints, and we see potential for significant equity returns from this level, thanks to revisions and multiple expansion.”
Regarding financial estimates, for 2024 BTIG projects Lottomatica’s revenue at €2.04 billion and EBITDA of €715 million, in line with the consensus of Visible Alpha (respectively €2.03 billion and €704 million). Then, in 2025, analysts expect revenue to grow by 11.3% and an EBITDA of €838 million.
The fundamental point remains the development of omnichannel gaming. “So long as Lottomatica can retain customers and tendencies persist across cohorts (not a pure replacement; online adoption increases sessions), we’d welcome the shift – making our Bull case scenario more obtainable,” BTIG concludes.
