1.Evolution is our top pick heading into February. We assess the company’s moat and long-term growth rate as highly misunderstood and often viewed upon with, in our view, undeserved skepticism.
2.We view the acquisition of NetEnt as a rare combination of revenue and margin expansion with tangible opportunities to leverage upon. It is our understanding that Evolution will further strengthen the offering and move more towards becoming a one-stop-shop for operators.
3.With the help of NetEnt’s offering, Evolution will be able to penetrate new markets faster. Furthermore, we assess that Evolution, who are known for their innovation, will infuse new life into NetEnt’s own product line.
4.We also see synergies from the acquisition on the cost side. Evolution’s management is renowned for running a tight ship with a focus on profitability, something we got a glimpse of as they announced a large restructuring on the day of the acquisition.
5. In addition, from our research, Playtech’s largest competitive advantage compared to Evolution is its ability to offer more services than just live casino.