With a market capitalization of just $275.25 million, it stands to reason that Inspired Entertainment (NASDAQ:INSE) is overlooked in the gaming equity conversation.
One analyst argues that shouldn’t be the case.
In a note to clients, B. Riley analyst David Bain reiterates a “buy” rating on the supplier of video gaming terminals (VGT) and software with a $30 price target, implying the shares can nearly triple from current levels. While VGT’s are cash generators and Inspired’s software business could be compelling with time, Bain is bullish on the operator’s internet lottery opportunity.
INSE has converted hundreds of its slot titles online and has begun converting game themes to iLottery ‘scratch off’ format, in our view. INSE continues to be on-track for the development of an online lottery platform for the Dominican Republic launch by summer,” says the analyst.
As Bain notes, the Dominican Republic’s lottery is larger than those found in many US states. However, there’s emerging controversy in the Caribbean country that threatens the future of the Dominican National Lottery.
Inspired Has Others Levers to Pull
While the Dominican Republic represents a risk/reward opportunity for Inspired, the good news is the operator has other, potentially less turbulent iLottery avenues ahead of it.
While iLottery isn’t yet generating fervor on par with internet casinos or online sports betting, it’s a growth segment in its own right. Some analysts see massive opportunity with internet lotteries, noting that the market could eventually rival that of online sports betting.
“We believe, in addition to the Dominican Republic, INSE will be chosen as the online lottery platform and content provider for several international jurisdictions – potentially by BH22E – and throughout CY23E and CY24E,” notes Bain.
The analyst also points out that the company is starting to reach out to domestic lotteries that are working with existing platform providers, including International Game Technology (IGT) and SG Lottery, to include Inspired content.
“We believe INSE could partner with multiple domestic iLottery providers for content distribution over the next 12 to 24 months,” writes Bain.
Inspired Could Be Inspiring Equity Idea
Lottery assets — interactive and traditional — are profitable and cash generators, which add to the allure of the Inspired story. Other catalysts include Inspired bolstering its balance sheet, reducing leverage and the firm’s potential participation in industry consolidation in 2022. Not only are the shares inexpensive, but Inspired is generating free cash flow — something few of its rivals are doing with regularity.카지노사이트 모음
“iLottery generates ~$5.2B across 12 jurisdictions, with 8 states allowing ‘scratch-off content,’ which make up nearly 90% of iLottery sales. Overall, iLottery is ~5% of total domestic lottery sales,” says Bain.
Those data points indicate there’s ample online lottery growth to be had, and they could also signal that with Inspired shares down more than 19% year-to-date, there’s potential value in the small-cap growth gaming name.