BRSL Stock Forecast & Price Target

Brightstar Lottery is a transformed company and a leader in the lottery industry with strong fundamentals and a consistent dividend payout. Despite a muted first half of the year, we expect a strong performance in the second half, driven by several drivers including per cap increases, jackpot recovery, and expansion into new markets. With a significantly undervalued stock and potential for further EBITDA and FCF growth, we maintain an "Outperform" rating and a price target of $21.

Brightstar Lottery is a pure-play lottery company with significant exposure to the US market, which has strict regulations and limited potential for growth. The company relies heavily on operating contracts and FMCs for revenue, which can be impacted by unpredictable factors such as jackpot levels and competition. Additionally, the recent spin-out of their digital division may lead to concerns about contract displacement and bid inflation, potentially hindering future growth. The company's focus on vending machines and iLottery is a promising strategy, but its impact may not be significant enough to offset the limitations of the traditional lottery industry and underlying market factors.