BofA Securities analyst Omar Dessouky double-upgraded the shares of Playtika Holding Corp PLTK on Wednesday from Underperform to Buy and raised the price forecast from $6 to $6.50.

The company has the highest profitability in the industry, with 30% EBITDA margins, and is home to some of the largest mobile gaming franchises, the analyst said.

Despite being in a mature yet growing industry, PLTK’s 21% FCF yield and 9% dividend yield suggest limited downside.

The stock’s recent dislocation is attributed to shareholder exits, delayed growth, and investor preference for ad network assets, opined the analyst.

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The analyst has increased the CY25 forecast for PLTK to $2.85 billion in Bookings and $740 million in EBITDA, based on January and February 3P data.

The company’s guidance appears conservative, suggesting a 6% Y/Y organic decline in CY25, worse than the -5% Y/Y decline in CY24.

The analyst’s estimate assumes SuperPlay generates $465 million in bookings (+22% Y/Y), while the existing portfolio declines by 5% Y/Y. Currently, SuperPlay is tracking +43% Y/Y.

Shareholder activism poses a potential risk to the dividend, as PLTK’s largest shareholder (63%) has unclear motivations.

While management has outlined a 50% capital return and 50% M&A framework for FCF use, it is not a formal policy and could change, noted the analyst.

Price Action: PLTK shares traded higher by 19.88% at $5.27 at last check Wednesday.

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