Investing.com - Morgan Stanley upgraded the shares of Lottomatica Group Spa (BIT:LTMC) from "Equalweight" to "Overweight" on Friday.
Morgan Stanley based the upgrade on a favorable risk-reward ratio and the potential for higher forecasts and cash returns at the Italian gaming company. The bank cited several catalysts that could accelerate the growth of Lottomatica's online sales.
Morgan Stanley highlighted the upcoming award of Italian licenses, which analysts believe could help Lottomatica gain market share from smaller operators. The recovery of PWO's shares following the platform changeover and the positive effects of the FIFA World Cup are also cited as growth drivers.
The investment bank expressed confidence in Lottomatica's capital allocation strategy and noted that management had accelerated its share buyback program. Morgan Stanley sees potential for an increase in the buyback amount of EUR 200 million assumed for 2026.
According to Morgan Stanley, the Lottomatica share is undervalued at current levels. It trades at a 2026 P/E of 11.0 and an EV/EBITDA ratio of 7.2 and offers a free cash flow yield of 8.7%.
