LeoVegas (No_rec, TP: SEK) - Discontinuing coverage

We have discontinued coverage of LeoVegas. Our last published recommendation, target price and estimates should no longer be relied upon.

Northern Lights

LeoVegas (Hold, TP: SEK61.00) - Finally made the big time

Following MGM’s SEK6bn bid for LeoVegas, equivalent to a blended average 2022–2023e adj. P/E of c15x on our new estimates, we have raised our target price to SEK61 (48) and downgraded to HOLD (BUY). Considering the board recommended MGM’s bid over several other parties’ non-binding proposals and the CEO/founder’s ‘irrevocable undertakings’, we see a high likelihood for the deal to be finalised and close in H2.

LeoVegas Minor model adjustments

We have fine-tuned our 2022–2024e EPS, mainly owing to: phasing in of the geographic regions; continued strong Swedish revenue growth (we forecast 74% YOY in Q1) offset by a soft rest of Europe; and slightly lower marketing spend offset by increasing personnel costs and other opex. We do not consider these changes to be material, and we have not changed our BUY recommendation. We reiterate our SEK48 target price. The Q1 results are due at 08:00 CET on 5 May.

LeoVegas (Buy, TP: SEK48.00) - Absorbing lion’s share of expansion

We are impressed by LeoVegas’s strong revenue growth in Sweden, but expect the growth to become more tilted toward North America in the medium term. We have slightly reduced our 2022e EBITDA, but still forecast healthy c20% EBITDA growth p.a. in 2022–2023e as we expect a disciplined expansion (re-regulation in Ontario, New Jersey, and the Netherlands in the coming quarters). We have trimmed our target price to SEK48 (50) but reiterate our BUY.

LeoVegas (Buy, TP: SEK50.00) - On course for a more normal 2022

We expect soft Q4 results (due at 08:00 CET on 11 February), with fairly stable revenue but adj. EBITDA down 9% YOY, reflecting the temporary Dutch exit (awaiting a licence in 2022e) and a weak Germany. We have cut our 2022e adj. EPS by 5%, but still look for a sharp acceleration in growth in 2022. We expect the underlying business to continue to progress well, and consequently reiterate our BUY and SEK50 target price.

LeoVegas (Buy, TP: SEK50.00) - Finding its way in the regulator zoo

Looking past the near-term external headwinds (weakness in Germany and Dutch re-regulation), we believe LeoVegas is on track to return to c10% group revenue growth YOY in 2022e. The key drivers are likely to include strong progress in Sweden, southern Europe, and Canada, coupled with the upcoming US expansion. We reiterate our BUY and SEK50 target price.

LeoVegas (Buy, TP: SEK50.00) - Waiting for Sweden to lift restrictions

We have cut our 2022e EBITDA by almost 10% to reflect LeoVegas’s temporary Dutch exit and rising marketing costs. A normalising Swedish market – on prospects of an end to pandemic-related market restrictions from November – could offset the Dutch situation near-term we believe. While we have cut our target price to SEK50 (56) to reflect our new forecasts, we reiterate our BUY.

The game of Dutch re-regulation

The future of online gambling in the Netherlands and potential risks associated with the future Dutch re-regulation have been key topics in our discussions with the industry and investors in the last ten years. Stakes are high for Kindred and Betsson, reflecting leading online market positions (acquisitions in 2005 and 2014, respectively). Near-term outlooks are clouded by the Dutch authorities’ (KSA) surprising new enforcement policy, but we view increased clarity on the Dutch outlook as a long...

LeoVegas (Buy, TP: SEK56.00) - Recovery next after German crash

We have fine-tuned our 2022e EBITDA (-3%), but remain attracted to the revenue-growth prospects and healthy cash flow. Although we would like to see a bit more sales-growth payoff from the recent step-up in marketing spending, we reiterate our BUY and SEK56 target price, which reflect our expectations of a growth recovery in Q3 and a healthy outlook for 2022e.

LeoVegas Minor model adjustments

We have updated our estimates owing to higher near-term marketing costs reflecting e.g. the re-launch of Expekt’s sportsbook brand in Sweden (in relation to the UEFA Euros); and further investment in new growth markets to offset: 1) a sharp revenue decline YOY in Germany (online casino market restrictions since end-2020 ahead of re-regulation); and 2) temporary pandemic-related online casino market restrictions in Sweden. We expect Q2 revenue and EBITDA of EUR101m and EUR11m, respectively (resul...

LeoVegas AB: 1 director

A director at LeoVegas AB sold 42,000 shares at 40.120SEK and the significance rating of the trade was 75/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two years clearly sho...

LeoVegas (Buy, TP: SEK60.00) - We follow the cash trend

We reiterate our BUY and SEK60 target price after a mixed Q1 report that triggered an in our view disproportionate share price reaction. We have lowered our 2022e EBITDA by 6% but remain positive on the underlying growth story and outlook. We find LeoVegas’s cash flow impressive (rolling 12-month adj. FCF of EUR61m, +87% YOY) and expect the stock to rise when the focus shifts to the H2 and 2022 outlook.

LeoVegas (Buy, TP: SEK60.00) - Growth and ‘open banking’ focus

We have raised our target price to SEK60 (53) and reiterate our BUY after the Q4 results showed impressive cash flow and a good start to 2021 despite the temporary headwinds in Sweden and Germany. We have raised our 2022e EPS by 5% due to a slightly lower cost of sales ratio, reflecting the group’s early launch of ‘open banking’, which could dramatically reduce its payment costs in the coming years.

Northern Lights

LeoVegas (Buy, TP: SEK53.00) - Growth expansion in focus

We forecast Q4 EBITDA up 33% YOY driven by revenue growth and healthy costs. Due to a successful ROI-based expansion focus, we believe LeoVegas will continue to grow earnings and cash flow by double digits, despite soft market conditions in Sweden and Germany. We have only fine-tuned our estimates, and reiterate our BUY and SEK53 target price ahead of the Q4 report (due at 07:30 CET on 11 February).

Northern Lights

LeoVegas (Buy, TP: SEK53.00) - Cash trend too strong to ignore

The sales growth trend remains a bit volatile, but we remain attracted to the overall growth outlook and positive earnings and cash flow trend. The company is approaching a net cash position, which we believe lifts the chance of potential buybacks. We have raised our target price to SEK53 (50) and reiterate our BUY.

Potential positive triggers ahead

LeoVegas (Buy, TP: SEK50.00) - German risk well reflected

We forecast a Q3 slowdown as a result of the temporary Swedish market restrictions. From Q1 2021, we expect LeoVegas to return to solid Swedish growth; however, the approaching German re-regulation has prompted an 18% cut to our 2021e EBITDA. We have lowered our target price to SEK50 (60) but reiterate our BUY ahead of Q3 (results due at 08:00 CET on 5 November).