Jefferies initiates Hacksaw Gaming at “buy” with 72% upside target By Investing.com

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Jefferies initiates Hacksaw Gaming at “buy” with 72% upside target

Published Aug 05, 2025 13:28

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Investing.com -- Jefferies has initiated coverage on Hacksaw Gaming (ST:HACK) with a “buy” rating and a SEK130 price target, representing a 72% upside from the previous close of SEK75.55.

The Stockholm-listed B2B online casino games supplier recently went public and has been flagged by the firm for its strong margins, rapid growth trajectory, and valuation discount relative to peers.

Hacksaw posted €137.1 million in revenue for FY24, with an 87% adjusted EBITDA margin, 85% adjusted EBIT margin, and €97 million in free cash flow.

Revenue and EBITDA grew at a 107% and 112% CAGR, respectively, between FY22 and FY24.

From FY24 to FY27, Jefferies projects a 46% revenue CAGR and 43% adjusted EBITDA CAGR, reaching €429.1 million in revenue and €350.5 million in EBITDA by FY27.

Net cash is projected to grow from €93.8 million in FY24 to €321.1 million in FY27, with a 75% net profit payout ratio through dividends and buybacks.

Jefferies’ SEK130 target is DCF-derived, based on a 16.5% WACC and 2% terminal growth rate.

The valuation assumes minimal growth beyond FY27, despite Hacksaw’s long-term growth target exceeding 30%.

The stock trades at a FY26E EV/EBITDA of 7.5x, compared with 8.7x for iGaming B2B peers, 8.2x for other B2B gambling peers, and 15.7x for Nordic tech peers. Free cash flow yield is projected at 11.2% in FY26E.

The company’s platform, OpenRGS, enables third-party developers to distribute games using Hacksaw’s tech stack, accounting for 50% of game output and 5% of FY24 GGR.

Hacksaw launched 38 internally developed games in 2024, averaging €0.74 million per game in revenue.

The company operates in over 70 countries, with 55% of FY24 revenue from Europe, 22% from Asia, and 15% from North America (Source: Jefferies, August 5, 2025).

Despite its strengths, only 12% of Q1 2025 revenue was from verifiably licensed operators in regulated markets, exposing the company to regulatory risk.

Jefferies identifies unregulated market exposure, regulatory changes, game volatility, and limited free float (15.1%) as key risks.

Hacksaw’s profitability exceeds peers, with higher margins and cash conversion. Compared to peer Evolution, Hacksaw operates at significantly lower personnel costs and capital expenditure, reflecting its asset-light model.

While Evolution generates higher average revenue per game at €1.73 million compared to Hacksaw’s €0.74 million, Hacksaw delivers greater development efficiency per employee.

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