Eivind

Proffesional Trader

[Eivind @LukeMcDuke]

We reiterate our BUY but have cut our target price to SEK1,100 (1,440). We expect buybacks, expansion, new games, and growth improvements to strengthen the story later in 2025

[Eivind @LukeMcDuke]

DNB $EVO Play it right in fencing
Despite intact 2025 EBITDA margin guidance, a soft Q1 and near-term uncertainties made us cut our 2025–2027e EPS by c10%. The step-up of focus on regulated markets supports the long-term case, although it comes with costs near-term.

[Eivind @LukeMcDuke]

That said, the ongoing phasing of players from unregulated to regulated operators should be seen as a positive at the end of the day, we believe. On a preliminary basis, we expect consensus 2025e EBITDA cuts of at least 5% and expect the shares to underperform c5-10% today.

[Eivind @LukeMcDuke]

$EVO Weaker than expected but with intact guidance
While Evolution reiterated its 2025 margin guidance, Q1 was weaker than expected partly due to Europe ringfencing initiatives, driving a 6% miss on consensus EBITDA.

[Eivind @LukeMcDuke]

The company expects to see continued impact on Q2 profitability, but with improvements in H2. Evolution’s near-term initiatives (‘clean-up’) together with European gaming regulators, including controversial IP blocking in some cases, has been more negative than we had expected.

[Eivind @LukeMcDuke]

While still early, Q2 has started very strongly, with 12% QOQ player growth so far. In conclusion, our data signals strong underlying demand for Evolution’s products and a vital recovery after the H2 headwinds.

[Eivind @LukeMcDuke]

$EVO Buying opportunity on our data
According to our tracker, Evolution’s daily average players grew by 10% QOQ in Q1, compared with our quarterly average Live revenue growth of 3% for 2025e.

[Eivind @LukeMcDuke]

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.

[Eivind @LukeMcDuke]

DNB $EVO 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.

[Eivind @LukeMcDuke]

In total, we think that the Q3 results show healthy level of resilience from the business as well as further signs of stabilisation when it comes to the revenue growth (near 20%).

[Eivind @LukeMcDuke]

DNB $EVO Q3 adj. EBITDA was in line with cons (3% above us) and group revenue growth at constant FX improved slightly to 19% YOY – despite the issues in the key Georgia studio (union strike which made EVO run at only 60% capacity).

[Eivind @LukeMcDuke]

On a preliminary basis, we expect fairly stable consensus and a potential relief in the shares at end of the day. If possible, we would buy on weakness if there is any from the margin guidance talk (similar level in Q4 as in Q3).

[Eivind @LukeMcDuke]

On the positive side, MOM growth has returned in October (+4%) and the company should see volume support in H2 from a stronger Live game release schedule, among other things.

[Eivind @LukeMcDuke]

DNB $EVO Data needs to be explained

According to our tracker, Evolution’s daily average players dropped 9% QOQ in Q3. We struggle to fully understand the softness, although there could have been a slight negative effect from the temporary Union strike in the Tbilisi studio.

[Eivind @LukeMcDuke]

The share buybacks should continue in Q4, and focus shifting to 2025e should be positive for the equity story in our view, with a return to healthy EPS growth (nearly 20% YOY), and more tangible evidence of the much-improved capital allocation strategy.

[Eivind @LukeMcDuke]

DNB $EVO Turn the page and let’s get to work

We reiterate our BUY, but have lowered our target price to SEK1,550 (1,600) on a 3% cut to our 2024e EBIT, reflecting temporarily reduced capacity of tables in Q3 in a key studio (union strike in Tbilisi).

[Eivind @LukeMcDuke]

Positively, MOM player growth has returned in September, in line with the sector’s seasonal patterns, and the weak share price suggests generally low Live revenue growth expectations among investors.

[Eivind @LukeMcDuke]

DNB $EVO According to our tracker, Evolution’s daily average players declined by 7% QOQ so far in Q3. Our data coupled with the temporary turmoil in the Tbilisi studio could imply minor downside risk to consensus Q3e Live revenue growth.

[Eivind @LukeMcDuke]

we calculate the following preliminary 2025–2026e EPS impacts on the companies we cover: Grieg Seafood (15%), SalMar (12%), Lerøy Seafood (9%), Måsøval (8%), Mowi (7%), and Bakkafrost (0%). While this is only a proposal, we believe it will likely materially lift seafood stocks

[Eivind @LukeMcDuke]

DNB: The largest opposition party (Høyre) has launched a new draft proposal for its next parliamentary election programme. One of the suggestions is a lower and less bureaucratic resource tax. In the event of a 15% resource tax (down from 25%), $salm $mowi $gsf $lsg