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Berenberg ups target price on Jackpotjoy
Berenberg reiterated its 'buy' recommendation on shares of online gaming platform Jackpotjoy on Tuesday, citing the firm's positioning within the UK digital bingo-led market as just one of many positives seen by its analysts.
With 90% of JPJ's revenues over the last 12 months being generated by clients who had been with the group for at least one year, a strong set of growth opportunities outside of the UK, including Spain, Sweden and Italy, and high cash flow generation, which should allow the company to start distributing dividends or other forms of shareholder returns, Berenberg felt that, at its current share price, none of the aforementioned factors were "fully appreciated".
While other UK-focussed bingo-led companies were struggling, Berenberg also saw the potential for positive impacts over at JPJ as a result of a reduction in the gaming tax rate in Spain, as well as it having nearly obtained a licence in Italy.
Based on 2017 numbers, Berenberg said that every 1% increase in remote gaming duty, set to jump from 15% to 20% in January 2020, would translate into a £2m reduction in EBITDA for JPJ.
"While this would theoretically mean a circa £11m negative impact on EBITDA from 2020 onwards, we have also taken into account some mitigating factors, namely quicker revenue growth in the UK and some cost containment," the broker stated.
In addition to reiterating its stance on the shares, Berenberg upped JPJ's target price from 1,150p to 1,300p.