Shares of Playtika Holding Corp. (PLTK, Financials) climbed more than 21% on Wednesday after Bank of America raised its rating on the mobile game developer by two levels, moving it from “underperform” to “buy” and setting a price target of $6.50—representing a 23% upside from the latest closing price of $5.28.
In a research note from March 26, Bank of America stated that Playtika is part of a well-established but still growing mobile gaming industry, which is expected to grow by at least 4% each year. Analysts highlighted Playtika's top profitability in the industry, its position as the largest direct-to-consumer platform, and its ownership of three of the oldest mobile game franchises as important strengths.
The investment bank said that the previous decline in Playtika's stock price was due to a big shareholder leaving in a low-liquidity market, the long process of returning to growth, and investors favoring mobile advertising companies like AppLovin over game publishers.
Bank of America projected that Playtika will make $2.85 billion in bookings and $740 million in earnings before interest, taxes, depreciation, and amortization in 2025, using data from January and February provided by third parties. Analysts said that Playtika's current forecast, suggesting a 6% drop in organic growth compared to last year, is too cautious.
Even with challenges in attracting users and making money in casual gaming, analysts believe that Playtika's strong free cash flow and the possibility of exceeding expectations in 2025 present a good risk-reward situation.
