Stars and stripes

Evolution (Buy, TP: SEK1440.00) - Our data reinforces the growth story

According to our tracker, Evolution’s daily average player total has increased by a healthy 8% QOQ so far in Q1. March has surprised positively, with 9% MOM growth so far, and the ‘Speed Baccarat’ data bodes well for potential signs of resilience in the key Asia segment. After the challenges in H2 2024, the current trends reinforce Evolution’s Live growth story; we reiterate our BUY and SEK1,440 target price.

Stable February player data

Evolution (Buy, TP: SEK1440.00) - Race to get back on track

According to our tracker, Evolution’s daily average player total has increased by a healthy 7% QOQ so far in Q1, driven by growth in all the scalable games categories. Despite weaker tailwind from seasonality, in February, daily average players are so far up a solid 4% MOM. We find it promising that Evolution is already approaching the peak player numbers seen before the strike in Tbilisi, and we do not believe our or consensus Q1 revenue growth forecasts (2–3% QOQ) look stretched.

January players down 4% m-o-m

Evolution (Buy, TP: SEK1440.00) - Growing through the noise

We reiterate our BUY but have lowered our target price to SEK1,440 (1,500), reflecting a 4% 2025e EPS cut following the EBITDA margin guidance for the year (66–68%). On the positive side, cash distribution should be at least cEUR1.1bn in 2025e (c100% of 2024 FCF), including near-term buybacks, and, in our view, as the recent negative consensus revisions stabilise, earnings and cash flow should be more decisive for the stock.

Awaiting the Asian recovery

Q4 in line, but lower '25 margin guidance

ICE 2025: what we learned

Headwinds appear discounted

Evolution (Buy, TP: SEK1500.00) - A return to fundamentals

We have cut our 2025e EPS by 3% (Asia revenue growth from 13% to 10% YOY) and our target price to SEK1,500 (1,570), but reiterate our BUY. We find underlying fundamentals still-healthy and near-term negatives more than reflected in the stock. After a strong end to Q4 (albeit early days), our data implies a healthy start to 2025 (daily average players +10% QOQ). Our Q4e EBITDA is EUR364m (68.2% margin, -30bp QOQ).

December players up 11% m-o-m

First takes on UKGC regulatory review

Evolution (Buy, TP: SEK1570.00) - Wrapping player growth for Xmas

Our proprietary data tracker shows a very strong start to December (up 10% MOM), with growth in all segments. Accelerating player activity in the holiday season could result in QOQ player growth for Q4 (versus -9% in Q3 and -4% QTD in Q4). The situation in Georgia (union strike) has calmed down for Evolution, and healthy US market data bodes well for more near-term sales growth improvements.

November players ~flat m-o-m

October player activity stabilising

Evolution (Buy, TP: SEK1570.00) - Live casino resilience

We have raised our target price to SEK1,570 (1,550) and reiterate our BUY after signs of stabilising Live revenue growth (c20% YOY at constant FX) and delivery of mitigating factors for the capacity constraints in Georgia. We have fine-tuned our 2025e EPS and expect more execution of the cash distribution and EPS growth case. We are attracted to the expansion story, e.g. the upcoming studio launches in Brazil and the Philippines.

Impressive execution

Relief

Heads-up for report 24 October