On Monday, Morgan Stanley (NYSE:MS) adjusted its stance on Evolution AB (EVO:SS) (OTC: EVGGF) stock, moving from an Overweight to an Equalweight rating. The firm also revised the price target downwards to SEK1,210.00 from the previous SEK1,530.00. The decision follows a quarter that did not meet the firm's revenue expectations.
The downgrade reflects Evolution AB's recent performance, which has shown signs of slowing growth. The company's second-quarter results fell short of Morgan Stanley's projections by approximately 4-5%.
Despite some factors that could explain the shortfall, such as a significant Crazy Time game payout and the impact of strong sports margins at operators, the overall development in most regions has been slower than anticipated.
Morgan Stanley specifically pointed out the company's performance in North America as a cause for concern. The region's year-on-year growth of 8% in the second quarter was notably lower than the industry growth, which data from various states suggest is around 20-30%. This contrast highlights North America as a particularly weak market for Evolution AB during the period in question.
The firm's previous Overweight rating was based on an expectation of revenue acceleration through 2024 for Evolution AB. However, the current trajectory indicates that this anticipated acceleration is not materializing as expected.
The adjustment in the company's stock rating and price target by Morgan Stanley is a direct response to the observed trends and the results reported for the second quarter. Evolution AB's stock will continue to be monitored to assess whether the current Equalweight rating aligns with its market performance moving forward.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.