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JPMorgan began coverage of French gaming operator FDJ United (FDJ:FP) with an overweight rating and a price target of EUR42.00 on Tuesday. The rating comes as the company’s shares have declined approximately 15% since their November 2024 high, while the CAC 40 index has gained 10% during the same period.
The investment bank highlighted FDJ’s position as a leading French gaming operator with a dominant retail presence in France, representing about 80% of gross gaming revenue. The company has been expanding internationally following its acquisition of Kindred and has grown to become the third-largest player in France’s online gaming market with over 20% market share.
JPMorgan described FDJ’s business model as "defensive" and "asset-light," noting the company operates with retail exclusivity while steadily gaining market share in online gaming. The firm also pointed to potential growth from the iCasino opportunity in France, which could add high single-digit percentage upside to EBITDA as the market matures.
Regulatory changes in key markets have resulted in material consensus downgrades for FDJ’s fiscal year 2025 and beyond, with analysts reducing EBITDA and EPS estimates by high single-digit percentages on average. Despite these challenges, JPMorgan views the recent correction as "an appealing entry point for a high return defensive business with a sound balance sheet."
The company currently trades at 7.9 times enterprise value to EBITDA, which JPMorgan notes is at the low end of its historical average, and offers an 8.8% free cash flow yield based on fiscal year 2026 estimates. FDJ is scheduled to hold a Capital Markets Day on June 24, where it will provide further details on its strategy and outlook.
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