Playtech is very undervalued in a software sector filled with overvalued stocks, reckons Peel Hunt.
That explains the takeover interest, which peaked in the middle of this year after TTB, Aristocrat and JKO Play all attempted billion-pound deals.
While acquisition isn’t off the cards yet, “Playtech is under no pressure to sell any part of the business” said the broker.
The $250mln sale of Finalto, a financial trading division, has enabled debt to clear early prompting Peel Hunt to raise EPS forecasts by 30%.
Interim results were strong and the broker has raised its forecasts for underlying profits [EBITDA] in 2022 by 7%.
"One of Estonia’s first unicorns, the company is likely to participate in value-creating transactions… once capital markets stabilise” Peel Hunt added.
New CFO Chris McGinnis is set to take over on Monday succeeding Andrew Smith.
Target price is 800p against 544p in the market currently and 'buy' is the recommendation.