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Investing.com -- J.P. Morgan initiated coverage on FDJ United (EPA:FDJU) with an “overweight” rating and a price target of €42, sending shares up over 3% on Tuesday.
The price target for December 2026 implies approximately 30% upside from current levels.
FDJ United operates as a leading gaming company in France, generating around 80% of its gross gaming revenue from its domestic market.
The company holds exclusive rights across lottery and retail sports betting, securing a monopoly on about 80% of its gross gaming revenue.
It also holds a growing position in the online segment, ranking as the third-largest online gaming operator in France with more than 20% market share.
J.P. Morgan highlighted the company’s recent acquisition of Kindred, which has expanded FDJ’s international footprint, including the Netherlands where it generates roughly 5% of its gross gaming revenue.
The brokerage noted that FDJ operates a defensive, asset-light retail business model, strengthened by its exclusivity rights, while continuing to expand online.
In its report, J.P. Morgan examined the potential for iCasino legalization in France, stating that such a development could add a high single-digit percentage upside to FDJ’s EBITDA as the market matures.
The brokerage also outlined expectations ahead of FDJ’s Capital Markets Day scheduled for June 24.
FDJ shares have declined about 15% since their November 2024 peak, while the CAC 40 index has gained 10% over the same period.
J.P. Morgan attributed the stock’s pullback to regulatory changes in key markets, which led to consensus downgrades for fiscal year 2025 and beyond, averaging high single-digit percentage reductions at the EBITDA and EPS levels.
Despite these pressures, J.P. Morgan views the current valuation as attractive. The stock trades at 7.9 times estimated FY2026 EV/EBITDA, which is at the lower end of its historical range, and offers an 8.8% free cash flow yield for FY2026.