Canaccord Genuity 'strongly' reiterates 'buy' rating on Gamesys

Analysts at Canaccord Genuity took a fresh look at gaming technology firm Gamesys on Tuesday, stating the company's third-quarter update should provide "re-rating impetus".

Canaccord expects Gamesys to release a third-quarter trading update with positive revenue growth numbers likely running ahead of its interim forecasts of 14% after current trading was reported to be "strong" across its major markets back in August.

The Canadian bank pointed out that since then, competitor reports had suggested that activity levels had remained elevated in the third quarter, particularly in UK casino and bingo operations.

Whilst Canaccord acknowledged that Asian revenues tended to be "more volatile", its forecasts had been conservatively struck and that it now estimates third-quarter revenue growth to come in at 16% up to £168.1m.

"As such, we continue to believe the forecast risk remains on the upside, despite the uncertain macro-economic outlook," said Canaccord, which "strongly" reiterated its 'buy' rating and 1,320.0p target price on the stock.

"We think there is scope for a re-rating given the discount the stock trades on to the peer group on just 7.1x FY21E EV/EBITDA compared to the sector average of 9.9x."