Monday - B.Riley resumed coverage on Inspired Entertainment Inc (NASDAQ:INSE), assigning a Buy rating to the company's shares with a new price target of $21.00. The firm highlighted the potential of Inspired Entertainment's digital business to significantly elevate its stock price, suggesting a possible 70% increase from the closing price on Thursday, April 2, 2024.
The analyst believes that the company's shift towards digital, which currently represents over 50% of its EBITDA, is likely to continue and even accelerate in the second half of 2024. The firm pointed out that Inspired Entertainment's Virtual Sports (VS) business and hybrid dealer product offer unique value in the digital space, which could lead to scarcity value.
Inspired Entertainment's recent late filings, which did not indicate any material changes in historical results or adjustments to its business trajectory or future outlook, have negatively impacted its share value. This has created what B.Riley considers a significant disparity between the company's valuation and its fundamentals. The analyst expects Inspired Entertainment to resume regular filing in the near term.
The firm also noted that Inspired Entertainment is currently trading at 4.8x/4.1x CY24E/CY25E EV/EBITDA, which is a 36%/39% discount compared to its peers. This valuation gap, according to B.Riley, underscores the investment opportunity in Inspired Entertainment's shares.
InvestingPro Insights
Following the positive outlook from B.Riley on Inspired Entertainment Inc (NASDAQ:INSE), InvestingPro data and tips further illuminate the company's financial health and future prospects. With a market capitalization of $250.39M and a robust revenue growth of 18.41% over the last twelve months as of Q3 2023, the company's financial trajectory appears promising. The impressive gross profit margin of 60.46% during the same period highlights the company's efficiency in managing its cost of goods sold relative to its sales.
InvestingPro Tips suggest that Inspired Entertainment's liquid assets surpass its short-term obligations, indicating a strong liquidity position. Additionally, analysts predict the company will be profitable this year, backed by its profitability over the last twelve months. Notably, the company does not pay a dividend, which could be a strategic decision to reinvest earnings back into the business for further growth. For investors interested in a deeper dive into Inspired Entertainment's potential, there are additional tips available on InvestingPro, which can be accessed with a special offer using the coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
With the next earnings date scheduled for May 8, 2024, and the company's shares currently priced at 59.63% of their 52-week high, investors may find an attractive entry point, especially when considering the fair value estimates ranging from $12.08 to $15.00. In summary, the combination of favorable analyst coverage, solid financial metrics, and InvestingPro insights paint a positive picture for Inspired Entertainment as a potential investment.
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