Inspired Entertainment stock rating reiterated at Market Outperform by JMP

Investing.com - JMP Securities has reiterated its Market Outperform rating and $12.00 price target on Inspired Entertainment Inc (NASDAQ:INSE), representing a 28% upside from the current price of $9.38. According to InvestingPro data, the company trades at an attractive P/E ratio of 4.4x, suggesting potential undervaluation.

The firm highlighted the scaling potential of online gaming content providers in both iGaming and iLottery segments, noting their attractive, recurring business models that can lead to superior margins compared to other gaming sectors. This is evidenced by INSE’s impressive gross profit margin of 70%, as reported by InvestingPro.

JMP pointed out that while software development and employees represent the main investment areas for companies like Inspired, volume and scale ultimately support high free cash flow conversion, which the firm believes will eventually apply to EQL Games.

The analyst emphasized that volume is a key driver, which should come from adding more content through a balance of aggregation and in-house content production over time.

For context, JMP noted that several gaming companies separately report EBITDA margins related to content distribution in online gaming, underscoring the segment’s distinct financial profile.

In other recent news, Inspired Entertainment Inc. reported its Q2 2025 earnings, revealing a notable miss on earnings per share (EPS) expectations with a recorded EPS of -$0.19, falling short of the anticipated $0.15. Despite this, the company exceeded revenue forecasts, achieving $80.3 million against the expected $75.47 million, marking a 6.4% increase. Additionally, Inspired Entertainment has entered into a definitive agreement to sell its UK holiday parks business to Japanese company GENDA Inc. for approximately £18.6 million ($25.1 million) in cash. This transaction involves managing over 11,000 amusement and gaming machines across UK holiday parks and entertainment venues.

In terms of analyst perspectives, JMP Securities reiterated its Market Outperform rating for Inspired Entertainment, maintaining a price target of $12. The firm highlighted the company’s progress toward achieving EBITDA margins exceeding 40% through strategic restructuring and divestment of low-margin operations. Furthermore, Inspired Entertainment launched V-Play Football Brazil with EstrelaBet, a Brazilian gaming company, through Altenar’s sportsbook platform. This virtual sports product aims to capture the excitement of Brazilian football with high-frequency match simulations. These developments reflect the company’s ongoing efforts to expand its market presence and streamline operations.

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