Inspired Entertainment (NASDAQ: INSE) may not be the most well-known gaming stock out there, but analysts are optimistic about its potential for growth. With a market capitalization of $277.74 million, the company has been flying under the radar for some investors. However, recent performance has caught the attention of experts. Over the past month, the stock has surged by 16.67%, indicating that there may be more room for growth.
One of the key factors driving this positive sentiment is the company’s strong third-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA). Analyst David Bain from B. Riley highlights the structural margin enhancements in Inspired’s gaming and leisure segment, which have contributed to a 47% growth in interactive EBITDA. This growth is largely fueled by a 40% increase in revenue and improved margins.
The interactive unit at Inspired is seen as a significant driver of future growth. With a robust content library and partnerships with major players in the iGaming space such as BetMGM, Caesars, and FanDuel, the company is well-positioned to capitalize on the rapidly expanding online gaming market. Deals with operators in multiple countries, including the US, provide further growth opportunities.
Looking ahead, Inspired is preparing for a full launch in Brazil by the end of the year, which could open up new revenue streams in Latin America’s largest economy. The company is also entering new markets like Italy, which is Europe’s largest regulated gaming market outside of the UK. These strategic moves are expected to drive further growth and revenue for Inspired in the coming quarters.
While there has been speculation about Inspired Entertainment considering asset sales to enhance shareholder value, the company is currently benefiting from the cash flow generated by its holiday park unit. Analysts believe that a potential sale of this business could still be on the table in the future, but for now, the company’s strong financial position gives it flexibility in timing and pricing.
In conclusion, Inspired Entertainment’s recent performance and strategic initiatives have positioned it for potential growth in the gaming industry. With a focus on expanding its interactive unit, entering new markets, and leveraging partnerships with key operators, the company is well-positioned to capitalize on the growing demand for online gaming. Investors and analysts are optimistic about Inspired’s prospects for the future, making it a stock to watch in the gaming sector.
