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

Analysts modestly lifted their Brightstar Lottery price target to about $20 per share from the prior $18 level, citing building estimate momentum, multiple growth vectors, and the potential for a valuation multiple re rating as organic growth accelerates.

Analyst Commentary

Bullish analysts highlight that the recent lift in the price target reflects growing confidence in Brightstar Lottery's ability to convert its robust pipeline and product portfolio into faster organic revenue growth, supporting a higher valuation framework over the medium term.

They point to the recent Powerball and Mega Millions jackpots as a key near term catalyst that is likely to drive Q3 upside, reinforcing the view that normalized jackpot activity can sustain elevated ticket volumes and strengthen earnings visibility.

As management continues to engage the investment community through investor meetings, bullish analysts also see improved execution transparency and clearer communication around growth initiatives as incremental positives for both sentiment and the potential for a valuation multiple re rating.

At the same time, some market participants caution that the pace of organic growth and the durability of jackpot driven upside will need to be demonstrated consistently before the shares can fully re rate to the higher end of peer valuation ranges.

Bullish Takeaways

• Recent target increases are framed around accelerating organic growth, with bullish analysts expecting multiple growth vectors to support sustained top line expansion and justify a higher price target range.
• Jackpot normalization and recent high profile jackpots are viewed as structural and cyclical tailwinds that can lift near term earnings and reduce volatility in forward estimates.
• Stronger estimate momentum, driven by improved visibility into Q3 upside, is seen as a catalyst for continued positive revisions and incremental multiple expansion.
• Ongoing investor engagement by management is interpreted as a sign of execution confidence, helping to narrow perception gaps and support a re rating closer to growth oriented lottery and gaming peers.

Bearish Takeaways

• Bearish analysts remain cautious that a portion of the recent upside is tied to jackpot driven demand, which may not be fully repeatable and could lead to choppier results once jackpot levels normalize.
• There is concern that expectations for an inflection in organic growth may now be embedded in the valuation, leaving less room for error if execution around new initiatives or markets is slower than anticipated.
• Some investors worry that the case for a sustained multiple re rating still relies heavily on external demand catalysts rather than fully proven, internally driven growth levers.
• A higher price target range increases the bar for future performance, and any signs of estimate cuts or softer ticket trends could prompt a pullback in the shares from current levels.

What's in the News

• Signed a 19 year lottery technology and digital products contract with Lotterywest in Western Australia, including a new central gaming system, 775 Retailer Pro S2 terminals, and expanded local economic commitments (Client Announcements).
• Launched patented Cash Pop draw based game with the Pennsylvania Lottery, the 17th U.S. state to offer the game and the first to debut with a $20 price point; this supports higher per ticket spending (Product Related Announcements).
• Entered a five year exclusive global licensing agreement with Spin Master to develop Rubik's themed omnichannel lottery games, adding a high profile branded franchise to the portfolio (Client Announcements).
• Extended its technology and services contract with the Texas Department of Licensing and Regulation through August 31, 2028, reinforcing its position with a major U.S. lottery customer (Client Announcements).
• Completed a $250 million share repurchase totaling 6.69% of shares outstanding and raised the quarterly dividend 10% to $0.22 per share while reaffirming 2025 guidance and targeting $2.75 billion of revenue by 2028, which implies over 5% organic CAGR (Buyback Tranche Update, Dividend Increases, Corporate Guidance).

Valuation Changes

• The fair value estimate remains unchanged at approximately $20.17 per share, indicating no shift in the underlying intrinsic value assessment.
• The discount rate edged lower from about 13.40% to 13.25%, reflecting a slightly reduced perceived risk profile in the valuation model.
• The revenue growth assumption increased from roughly 1.21% to 1.30%, signaling a modest improvement in expected top line expansion over the forecast period.
• The net profit margin was nudged down marginally from about 12.03% to 12.00%, suggesting a slightly more conservative view on future profitability.
• The future P/E multiple ticked down from roughly 14.93x to 14.88x, implying a very small recalibration of the earnings multiple applied in the forward valuation.