BofA upgrades Playtika to Buy with $6.50 target.
SuperPlay expected to generate $465 million in bookings, up 22%.
BofA Securities analyst Omar Dessouky double-upgraded the shares of Playtika Holding Corp on Wednesday from Underperform to Buy and raised the price forecast from $6 to $6.50.
The company has the highest profitability in the industry, with 30% EBITDA margins, and is home to some of the largest mobile gaming franchises, the analyst said.
Despite being in a mature yet growing industry, PLTK’s 21% FCF yield and 9% dividend yield suggest limited downside.
The stock’s recent dislocation is attributed to shareholder exits, delayed growth, and investor preference for ad network assets, opined the analyst.
The analyst has increased the CY25 forecast for PLTK to $2.85 billion in Bookings and $740 million in EBITDA, based on January and February 3P data.
The company’s guidance appears conservative, suggesting a 6% Y/Y organic decline in CY25, worse than the -5% Y/Y decline in CY24.
The analyst’s estimate assumes SuperPlay generates $465 million in bookings (+22% Y/Y), while the existing portfolio declines by 5% Y/Y. Currently, SuperPlay is tracking +43% Y/Y.
Shareholder activism poses a potential risk to the dividend, as PLTK’s largest shareholder (63%) has unclear motivations.
While management has outlined a 50% capital return and 50% M&A framework for FCF use, it is not a formal policy and could change, noted the analyst.
Price Action: PLTK shares closed higher by 20.45% at $5.30 on Wednesday.
