NetEnt (Hold, TP: SEK31.00) - The buy of the tiger
We find it positive that NetEnt is taking action to improve the poor growth trend. The SEK2.6bn acquisition of competitor Red Tiger could be the right move longer-term. However, it was costly and given the very competitive market, it comes with high risk. Our proprietary casino study suggests that Red Tiger has gained significant share lately, while NetEnt has continued to slide. We calculate that NetEnt’s 2020e EV/EBITDA moved from 6x to 8x today after the positive share price reaction.
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