Shares in Playtech PLC (LSE:PTEC) look undervalued, even allowing for ongoing legal uncertainty, according to Citi, which argues the group is increasingly well positioned in the fastest-growing and most regulated parts of the online gambling market.
Playtech operates primarily as a business-to-business supplier, providing software, live casino content and services to gambling operators.
Citi’s thesis rests on two pillars: growth in the Americas and a business mix that is more heavily weighted towards regulated markets than many peers.
Initiating coverage, the bank said it sees particular upside in the Americas, where it expects revenues to come in well ahead of current market forecasts.
Citi’s estimates for 'Americas' revenue in 2025 and 2026 are 4% and 8% above consensus, respectively, driven by continued investment in Playtech’s live casino product and capacity, especially in the US.
As more states regulate online gambling, Citi believes Playtech is well placed to capture incremental demand.
Regulation is a key differentiator. In the first half of 2025, 81% of Playtech’s B2B revenues came from regulated markets, compared with about 45% for Evolution, its closest listed peer.
Citi argues this higher exposure improves earnings visibility and reduces the risk associated with unregulated or grey markets, justifying a valuation premium.
Citi has lifted its profit expectations accordingly, forecasting group adjusted earnings before interest, tax, depreciation and amortisation 6% above consensus in both 2025 and 2026.
Risks remain. An adverse outcome in the ongoing litigation with Evolution, tighter regulation, slower US legalisation and cybersecurity issues could all weigh on sentiment.
Even so, Citi believes the current share price fails to reflect Playtech’s growth prospects, underpinning its £3.55 target price.