Last Update 08 Feb 26

Fair value Decreased 24%

EVOK: Future Upside Will Hinge On UK Gaming Tax And Review

Narrative update on Evoke

Analysts have trimmed their price target on Evoke to reflect a lower fair value estimate, softer assumptions for revenue growth and profit margins, a slightly reduced discount rate, and a higher future P/E multiple, citing recent downgrades and concerns about the impact of the higher UK gaming tax on future earnings.

Analyst Commentary

Bullish Takeaways

Bullish analysts highlight that even with a roughly 35% blended UK gaming tax rate, Evoke is still grouped with larger peers in sector research. They view this as a sign that it remains relevant in the broader UK betting space.
The view that Evoke can be compared alongside companies like Flutter Entertainment and Entain suggests some analysts see room for the group to execute within the same regulatory framework as better known operators.
Supportive analysts point to the higher future P/E multiple in recent models as a signal that, despite tax headwinds, there is still confidence that the market could assign a relatively stronger valuation if the company executes on its plans.
Some bullish analysts argue that tax clarity, even at a higher rate, can remove an element of uncertainty. They note that this may help investors focus more on Evoke's operational delivery and cash generation potential over time.

Bearish Takeaways

Bearish analysts are focused on the roughly 35% blended UK gaming tax rate, which is above the 25% to 30% level many investors had been assuming. They see this as a direct drag on sector earnings expectations, including for Evoke.
There is concern that a higher tax rate for iGaming could push some UK customers to offshore operators. This could make it harder for Evoke to sustain its UK revenue base and would add uncertainty to future top line assumptions.
Analysts trimming their price targets cite softer assumptions for revenue growth and profit margins. This suggests they now expect a less generous earnings profile to underpin valuation models.
The differential tax treatment between sports betting and iGaming is viewed as a potential headwind for long term support of sports content. This could limit Evoke's ability to reinvest aggressively in promotions and product where tax pressure is highest.

What's in the News

Evoke's board has launched a review of the company's options, considering a range of potential alternatives aimed at maximising shareholder value, including a possible sale of the group, selected assets or specific business units (company announcement).
Morgan Stanley & Co. International plc and Rothschild & Co have been appointed as joint financial advisers to support this review process (company announcement).
The board has stated there is no certainty that any transaction will happen or what terms might apply if one does. This leaves a wide range of potential outcomes for investors to weigh up (company announcement).

Valuation Changes

Fair Value Estimate: reduced from 0.64 to 0.48, indicating a sizeable cut to the modelled per share value.
Discount Rate: moved slightly lower from 17.29% to 16.91%, reflecting a small adjustment to the required return used in the models.
Revenue Growth: trimmed from 3.51% to 3.28%, pointing to slightly softer expectations for future top line expansion.
Net Profit Margin: reduced from 5.89% to 4.04%, signalling a meaningful reset in assumed profitability.
Future P/E: increased from 3.97x to 4.38x, suggesting analysts are now using a somewhat higher valuation multiple in their updated work.

Investment in automation, personalized technology, and asset-light strategies is driving operational efficiency, marketing returns, and scalable growth across markets.
International expansion and new, differentiated products are reducing geographic risk and supporting stable, long-term revenue and earnings growth.
High leverage, regulatory risks, structural retail challenges, limited geographic diversification, and unproven product-led growth strategies threaten profitability, revenue stability, and long-term earnings potential.

Catalysts

About Evoke

Operates as a betting and gaming company in the United Kingdom, Italy, Spain, Romania, Denmark, and internationally.What are the underlying business or industry changes driving this perspective?

Ongoing investment in AI-driven automation and operational excellence initiatives is expected to compound over time, driving sustained improvement in operational efficiency and net margins.
Strategic rollout of new gaming machines and product upgrades across core retail locations positions Evoke to capitalize on growing demand for differentiated and premium hospitality experiences, supporting long-term revenue and earnings growth.
Strong international performance and continued expansion into high-barrier, emerging markets (e.g., Romania) help diversify revenue streams and reduce geographic dependence, laying the groundwork for top-line revenue growth and greater earnings stability.
Brand licensing and asset-light market entry strategies (such as the ComeOn deal in the Netherlands) enable Evoke to leverage recognized brands without significant capital outlay, enhancing scalability and ROIC over the long run.
Increased focus on technology-led customer personalization and efficient, data-driven marketing is reducing churn and improving returns on marketing spend, supporting both revenue growth and expanding operating margins.

Evoke Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Evoke's revenue will grow by 5.3% annually over the next 3 years.
Analysts assume that profit margins will increase from -6.4% today to 8.3% in 3 years time.
Analysts expect earnings to reach £171.9 million (and earnings per share of £0.27) by about September 2028, up from £-113.3 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 4.3x on those 2028 earnings, up from -2.2x today. This future PE is lower than the current PE for the GB Hospitality industry at 16.9x.
Analysts expect the number of shares outstanding to grow by 0.08% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 17.04%, as per the Simply Wall St company report.

Evoke Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Continued high leverage (5x as of June, with a 2027 target of below 3.5x) means Evoke faces a prolonged period of significant debt servicing, making the company vulnerable to rising interest rates, tightening liquidity, and reducing flexibility for reinvestment or shareholder returns, which could pressure net margins and delay earnings growth.
Incremental tax or regulatory changes (e.g., potential increase in UK gaming duties in 2027, as discussed but not yet factored into plans) present material risk to future profitability, since substantial tax hikes may not be able to be offset through cost mitigation, directly impacting net income and margins.
UK retail business faces structural headwinds from declining high street footfall and ongoing cost pressures (NIC and National Living Wage increases), making improvement in retail revenue and profitability highly dependent on product initiatives that may not fully combat these long-term secular trends.
The strategy of focusing on core existing markets with high barriers to entry slows geographic diversification, increasing exposure to adverse regulatory or economic developments in key regions, and potentially exacerbating revenue volatility and limiting top-line growth.
The shift toward more product-led rather than promotion-led marketing means Evoke's brands (notably 888) are experiencing short-term revenue declines, and if new customer propositions fail to revive growth, this could lead to stagnation or loss of market share, weighing on future revenue and EBITDA.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of £1.016 for Evoke based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £1.1, and the most bearish reporting a price target of just £0.82.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be £2.1 billion, earnings will come to £171.9 million, and it would be trading on a PE ratio of 4.3x, assuming you use a discount rate of 17.0%.
Given the current share price of £0.55, the analyst price target of £1.02 is 46.2% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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