Goldman Sachs downgraded Evolution Gaming Group to a "sell" rating from "neutral," cutting its 12-month price target to Skr 545 from Skr 785 and putting fresh downward pressure on the stock on Thursday.
Over the last 12 months Evolution's shares have declined 28.5%, underperforming the FTSE World Europe index by 32.4%, according to FactSet.
Model changes and rationale
The bank cited persistent growth headwinds, deterioration in margins and an elevated risk profile as the drivers behind the decision. In its discounted cash flow analysis Goldman raised its weighted average cost of capital to 16.8% from 14.9% and trimmed the terminal growth rate to 2% from 3%.
Goldman said it had previously expected a return to double-digit revenue growth through 2026, but that another weak fourth-quarter print has reduced its confidence in the timing, visibility and sustainability of any re-acceleration.
Forecast adjustments
The broker lowered its 2026 revenue estimate by roughly 6% to 2.13 billion and cut mid-term EBITDA projections by double digits, with the reduction widening from an 8% cut in 2026 to a 17% cut by 2029. Goldman now models a 2026 EBITDA margin of 65.6%, marginally below the company's guidance of approximately 66.1% and well under the 2023 peak margin of 70.5%.
Revenue growth decelerated to 0.2% in 2025 from 14.9% in 2024. Goldman Sachs' updated view calls for roughly 3% growth in 2026 and about 7% compound annual growth through 2030, compared with a 43% live casino revenue compound annual growth rate over 2019-2023.
Risk factors highlighted
The bank flagged three main categories of risk: regulatory developments - including potential ring-fencing measures in the United States and Latin America - sustained margin pressure from competition and artificial intelligence, and ongoing disruption from cyber-attacks in Asia. Goldman noted that 54% of Evolution's 2025 revenue came from unregulated markets.
Under a bear-case scenario that assumes stable revenues in Asia and Europe combined with ring-fenced exposure in the Americas, Goldman estimated roughly 7% downside to 2027 consensus revenue and about 13% downside to 2027 consensus EBITDA.
Balance sheet and valuation
Evolution finished with net cash of 818 million, reported greater than 50% return on invested capital and delivered around 66% EBITDA margins. The stock trades at about 10x 2026 earnings, which Goldman said implies "a slight premium to the historical correlation between its valuation and revenue growth."
The company announced it will not pay a dividend in 2026. Goldman Sachs assumes a 1 billion buyback for the year in its modelling.
Market reaction and additional context
The downgrade and lower target reflect diminished visibility on a return to the double-digit growth trajectory Goldman had expected through 2026. The firm's revised forecasts and risk assessment point to a more cautious outlook for Evolution's ability to sustain past growth and margin levels in the face of regulatory change, competitive dynamics and cybersecurity threats.
About data-driven idea generation mentioned in company commentary
The article referenced an AI-driven stock selection product that evaluates companies using more than 100 financial metrics to identify risk-reward opportunities. That commentary noted the AI has previously highlighted winners such as Super Micro Computer and AppLovin, and suggested readers could check whether EVOG features in any current strategies or if there are alternative opportunities in the same sector.