Playtech’s share price has faced enduring pressure throughout the year, mainly due to the uncertainty of its involvement in the long-running legal battle with live casino supplier Evolution. While analysts argue that the market is overlooking the hidden value in Playtech’s investment portfolio, the evolving litigation continues to cloud sentiment and suppress the stock.
Investors Fear Legal Uncertainty
A recent Next.io report drew attention to a Peel Hunt evaluation of Playtech’s stock. The investment bank upgraded its target price on Playtech shares from GBP 5.10 ($6.83) to GBP 6.90 ($9.24)and reiterated a Buy rating, stating that the company is more than just a conventional gambling technology supplier. The broker views Playtech as a diversified investment platform with stakes in various areas, including sports betting, data, media, and emerging markets.
Despite Playtech’s diversification efforts, the Evolution case has dominated the narrative. The dispute centers around a lawsuit originally filed by Evolution, which alleges that Playtech commissioned and relied upon a report designed to tarnish Evolution’s reputation with regulators. Such allegations have kept investors wary even though Playtech denies any wrongdoing and claims that its actions were compliance-driven.
Peel Hunt analysts argue that the market is overestimating the legal risk. They believe the most likely outcome remains a settlement at a manageable cost, underlining Playtech’s experience resolving contentious disputes through negotiation rather than protracted court battles. Even a potential EUR 50 million ($59 million) loss places their valuation well above Playtech’s current share price.
Playtech’s Investment Portfolio Remains Sound
According to analysts, the market is underestimating the scope of Playtech’s investment portfolio. The company’s 30.8% stake in Caliente Interactive, Mexico’s leading online betting and gaming operator, is one of its most successful investments. Starting as a small investment from over ten years ago, it is now worth roughly EUR 726 million ($853 million). Playtech has also focused on the sports data and content market via its 49% investment in LSports.
Despite stellar long-term prospects, the Evolution lawsuit continues to shape short-term trading. Earlier this month, sworn testimony from investigative firm Black Cube alleged that Evolution’s content remained accessible in restricted markets. If accepted, that evidence could significantly bolster Playtech’s stance that it was merely reacting to potential sanctions and compliance exposure.
The situation remains uncertain. Playtech’s shares are trading at around GBP 2.88 ($3.85), a level Peel Hunt believes reflects apprehension rather than fundamentals. This gap could persist until a decisive resolution to the Evolution case is reached. Until then, the legal shadow will likely continue to weigh down a stock many analysts see as materially undervalued.