#Evo,
$Evo,
@Evo - Goldman Sachs raised Evolutions target share price with a buy to 1 670 SEK, on 26 April 2024 and the other day they lowered it to 1 000 SEK due to lowered growth than expected.
More loose speculation seem to be behind adjusting their recommendation to current share price conditions than a quality based analysis with conclusions regarding future slower growth potential.
What is really new except a couple of temporary challenges:
1. Workforce and studio limitations - temporary slowing growth - has nothing to due with slowed demand
2. Hackerattacks in Asia - normal problems to be handled if you have business on the internet - has nothing to due with slowed demand - just yet to be quantified and officially mitigated.
3. Uncertainties with revision of license in UK- not material, out of the 3 % revenue from UK more than 95 % are coming from licensed operators. - Not a material problem and it has no bearing on other authorities.
Evo is blocking illegal traffic and those players will likely find their way back to Evo through other licensed operators.
There is of course no reason for a gambling commission to revoke a license and make 95 % of Evos legal players illegal or incitamentized to be illegal in that market.
You just need to block a behavior that doesn't support channelization and ultimately don't provide the government with taxes.
Conclusion: The lower growth than expected is in no way related to weaker demand its mainly related to limitations in the available workforce in Georgia due to strikes and in some part hacker attacks in Asia.
The effects has also materialized in the report with fewer reported game rounds, but still the company has been able to increase revenues since Evo focused their service to the more profitable customers in certain affected markets.
In the Q3 report in 2023 the market was also disappointed but only one quarter later Evolution showed the market it had capability of quickly ramping up their workforce and initiating new studios resulting in a quick ramp up of workforce between Q3 2023 and Q4 2023. Analysts like Goldman where happy and quickly increased their share price targets...
Is there any reason why they shouldn´t be able to mitigate the same challenge again, they already done it one time - repetition is not the hardest thing to accomplish.
Is there really any likely fundamentals that motivates Goldman going back and forth in their opinion of the future - especially since its pretty obvious they are not reading it correctly - I say history will most likely repeat itself both when it comes to Evos coming ramp up of both workforce and products and that will again affect Goldman with revised valuations and target prices.
In the Q/A after the Q3 2024 the CEO of Evolution was very clear with the fact that Evolution was investing heavily in their growth and still had great margins which he by the way didn´s see any structural changes in going forward - I guess Goldman wasn´t on the call.