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Investing.com - UBS initiated coverage on Evolution AB (STO:EVO) with a Sell rating and a price target of SEK600.00 on Friday.
The investment bank cited concerns about Evolution’s exposure to unregulated markets, which it believes poses structural rather than temporary risks to the company’s business model.
UBS noted these regulatory risks have already impacted both Evolution’s earnings and valuation in recent periods, and the firm expects these challenges to persist.
The bank’s analysis suggests Evolution’s growth potential in regulated markets is unlikely to offset risks associated with its "grey" market exposure or sustain the double-digit revenue growth that consensus estimates currently project.
Despite Evolution’s recent stock derating, UBS pointed out that the company’s PEG ratio remains among the highest compared to its peers, contributing to what the bank views as a negative risk-reward balance.
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