J.P. Morgan has moved Allwyn AG down one notch in its rating scale, shifting the stock from "overweight" to "neutral" in a note dated Thursday. The brokerage also lowered its 12-month price target to €14.20 from €23.50, relative to a reported share price of €15.10 on April 8 - a level that the firm says implies roughly 6% downside to its new target.
The change in stance follows J.P. Morgan's updated forecasts for the combined Allwyn-OPAP business after the companies' business combination. The bank concluded that the enlarged group is "better positioned for top-line growth vs standalone OPAP," expecting average organic growth in the mid- to high-single digits over the 2026-2030 period. The brokerage attributes this outlook to a more diversified operating footprint and a greater exposure to online channels.
Despite the upgraded revenue trajectory, J.P. Morgan said these positives are counterbalanced by a set of material risks that prompted the downgrade. Key concerns include elevated leverage, the complexity of running a multi-country, multi-segment operation that mixes wholly owned businesses and associates, a limited track record in the equity markets, and what the firm views as a demanding valuation.
On leverage specifically, J.P. Morgan estimates Allwyn's net debt to EBITDA at about 3.4x for 2026, above the sector average of roughly 2.7x. The bank does not expect the company to reach its stated 2.5x leverage target before 2028 or 2029, a timeline that contributed to the brokerage's more cautious rating.
J.P. Morgan also trimmed its profit forecasts. Adjusted earnings per share estimates were cut to €0.98 for 2026 from €1.58, and to €1.14 for 2027 from €1.67. At the same time the firm significantly raised its revenue projections to reflect the combined entity - with 2026 revenue now seen at €5,285 million versus a prior view of €2.56 billion - but it emphasized that the upward revision reflects structural changes from the combination rather than an immediate improvement in underlying profitability.
Valuation was another factor behind the revised view. The bank's sum-of-the-parts analysis points to a blended multiple of about 9x forward EV/EBITDA, below the company's current level of roughly 10x. J.P. Morgan noted that Allwyn is trading at about a 20% premium to the sector-weighted average on the same basis.
Describing the group's scale, the brokerage calls Allwyn the second-largest publicly listed lottery and gaming operator globally, with approximately 40% of sales derived from lottery products and around 55% coming from exclusive licences. The note also flags that about 20% of sales are subject to licence renewals in 2027, an item of potential operational focus for investors.
J.P. Morgan concluded that it will continue to monitor the pace of deleveraging and the company's ability to hit targeted growth, margin, and cash objectives as it evaluates the combined group's longer-term investment case.
Data tools referenced in the original note
The original presentation that accompanied the brokerage commentary also referenced an AI-driven stock-selection tool that evaluates ALWr against thousands of companies using more than 100 financial metrics. That tool highlighted past winners such as Super Micro Computer (+185%) and AppLovin (+157%) as examples of prior successful picks, while inviting users to explore whether ALWr appears in its current strategies or whether alternatives in the same sector offer a better risk-reward profile.