Macquarie Holds Outperform Rating on Inspired Entertainment After Q3 Results Exceed Expectations

Macquarie kept Inspired Entertainment at Outperform with a $7 price target after third-quarter results it described as better than feared. The target implies 100% upside from the Nov. 5 close of $3.50. Senior gaming analyst Chad Beynon noted that investors had braced for a far larger downgrade after the shares fell 63% this year while the S&P 500 rose 7%.

The modest revision avoided a major estimate downgrade that would have pushed leverage, now 2.8 times, to a level small caps struggle to manage. Brazil's suspension of regulated online betting and gaming trimmed 2026 adjusted EBITDA guidance to $109 million-$112 million from $112 million-$118 million, a cut of roughly 4%.

Brazil Shutdown and Quarterly Performance

Adjusted EBITDA declined 13% to $28.2 million at a record 46% margin, 2% below consensus. Revenue fell 29% to $61.4 million, 6% under consensus, after the sale of the holiday parks business. Interactive revenue rose 3% despite the UK remote gaming duty increase to 40% from 21% in April.

Macquarie, which upgraded Inspired Entertainment on Oct. 23, cut its 2027 EBITDA forecast to $113 million from $116 million. That still yields about $22 million in free cash flow, a 22% yield. Management expects low-single-digit percentage growth in 2027 EBITDA even if Brazil stays shut, with margins above 45%. Other analysts lowered targets but kept positive ratings: B. Riley to $6.25 from $8.75, Citizens JMP to $7 from $9.

As reported by Gambling Insider, the focus now shifts from guidance cuts to free cash flow as the driver for the shares.