BRSL: Jackpot Normalization Will Drive Multiple Expansion And Next Phase Of Share Upside

Analysts have nudged their price target for Brightstar Lottery higher to $20 from about $19, citing multiple growth vectors, accelerating organic growth, and jackpot driven upside that support a modest rerating in the company valuation.

Analyst Commentary

Bullish analysts highlight that the recent price target increase reflects growing confidence in Brightstar Lottery's ability to convert its multiple growth vectors into accelerating organic revenue, which supports a higher valuation ceiling over the medium term.

They point to recent jackpot activity as a near term catalyst that can help the company outperform expectations. A more normalized jackpot environment is seen as providing a steadier backdrop for forecasting and potential multiple expansion.

Overall, the Street views the combination of operational execution, improved earnings visibility, and favorable industry trends as reinforcing the case for a modest re rating in the shares.

Bullish Takeaways

• Bullish analysts see the raised price target as evidence that accelerating organic growth is becoming more visible and better supported by recent trends in ticket demand.
• Recent large Powerball and Mega Millions jackpots are expected to drive upside to near term results, which could provide a catalyst for estimate revisions and sentiment improvement.
• Positive estimate momentum, underpinned by both jackpot normalization and execution on growth initiatives, is viewed as a key driver for potential multiple expansion.
• Management engagement with investors is interpreted as reinforcing confidence in the long term growth algorithm, which helps justify a higher valuation framework.

Bearish Takeaways

• Bearish analysts caution that a meaningful portion of the near term upside is tied to elevated jackpot activity, which may prove difficult to sustain and could introduce volatility to earnings.
• The anticipated re rating assumes continued acceleration in organic growth, leaving limited room for execution missteps or slower than expected uptake of new growth initiatives.
• If jackpot trends normalize more quickly or fall below recent levels, the current estimate momentum could fade, which could put pressure on both forecasts and the premium embedded in the new target.

What's in the News

• Signed a five year exclusive global licensing agreement with Spin Master to launch Rubik's themed instant, draw based, and iLottery games, expanding branded content across channels (Client announcement).
• Entered a contract with Pan Malaysian Pools to supply 1,200 next generation Retailer Pro S2 terminals, enhancing retail capabilities and international footprint in Asia (Client announcement).
• Secured a two year contract extension with the Texas Department of Licensing and Regulation to continue providing core lottery technology and services through August 31, 2028 (Client announcement).
• Declared a quarterly cash dividend of $0.22 per share, a 10% increase, with a record date of November 18, 2025 and payment on December 2, 2025 (Dividend announcement).
• Reaffirmed 2025 revenue guidance of about $2.5 billion and introduced 2028 revenue targets of $2.75 billion, with management indicating over 5% organic CAGR driven by core growth and iLottery expansion (Corporate guidance).

Valuation Changes

• Fair Value: increased slightly from about $19.07 to approximately $20.17 per share, reflecting a modest uplift in the intrinsic valuation.
• Discount Rate: risen marginally from roughly 13.11% to about 13.40%, implying a slightly higher required return and risk premium.
• Revenue Growth: edged down modestly from around 1.24% to about 1.21%, signaling a small tempering of long term top line growth assumptions.
• Net Profit Margin: improved fractionally from approximately 12.02% to about 12.03%, indicating a very slight enhancement in expected profitability.
• Future P/E: increased from roughly 14.0x to about 14.9x, suggesting a somewhat higher valuation multiple on forward earnings.