Inspired Entertainment (NASDAQ: INSE), despite its seemingly low-profile existence among gaming stocks, is beginning to draw more attention from analysts who believe it merits increased recognition. Often, companies with market capitalizations around $277.74 million, like Inspired, operate under the radar across various industries. However, a recent 16.67% rise in the stock over the past month suggests it may be ready for the spotlight. B. Riley analyst David Bain supports this view, crediting Inspired’s robust third-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) for the uptick.
In his analysis, Bain highlighted structural margin enhancements within Inspired’s gaming and leisure segment. Notably, the interactive EBITDA surged by 47%, buoyed by a 40% increase in top-line growth coupled with higher margins. These improvements have prompted Bain to rate Inspired shares as a “buy,” with a price target of $21, nearly double their recent closing price.
A key driver of this optimism is Inspired’s interactive unit, which forms the backbone of the company’s broader growth strategy. This unit is poised to capitalize on the burgeoning interactive gaming market, thanks to its strong content library. Additionally, Inspired holds significant potential in the rapidly expanding iGaming sector, having secured hybrid table game deals with major operators like BetMGM, Caesars, and FanDuel across multiple countries, including the US.
Bain pointed out that the impressive 40% growth was further amplified by margin gains despite rising costs as Inspired gears up for a full launch in Brazil before year-end. The launch strategy incorporates new game releases and a refined game introduction roadmap, including precise game replacement timelines and seasonal or holiday-themed games. Furthermore, new markets such as Italy are gaining momentum, with expansions into Peru and South Africa slated for the current quarter.
Italy stands as Europe’s largest regulated gaming market outside of the UK, and Brazil’s ongoing liberalization of online wagering laws could enhance its appeal to operators and content providers like Inspired.
A potential strategic move for Inspired could involve the sale of certain assets to boost cash flow and shareholder value. There has been speculation among analysts and investors that the company might divest its holiday park unit. While this seems unlikely in the immediate future given the unit’s free cash flow benefits, Bain maintains that such a sale might still occur down the line.
According to Bain, even without insight into specific mergers and acquisitions discussions, the holiday park business remains a likely candidate for sale. However, he emphasized that Inspired’s strong cash position and continuous cash flow generation place the company in a favorable position regarding the timing and valuation of any such sale.
 gains analyst praise with 16.67% stock rise, boosted by strong Q3 earnings and significant growth in interactive gaming.){kind=link}