Citi cuts OPAP stock rating to neutral, raises target to EUR20.50

Citi downgraded OPAP SA (OPAP:GA) to Neutral from Buy, despite raising the price target to EUR20.50 from EUR19.00, citing an anticipated slowdown in earnings momentum after a 26% year-to-date share price increase. Analysts project gross gaming revenue (GGR) and earnings per share (EPS) growth will decelerate to 3-4% for 2025-2026, constraining further stock re-rating, with the NTM P/E ratio already exceeding 14 times. While a dividend yield of approximately 8% is forecasted for 2025, the potential for total shareholder return is now viewed as limited.

Analysis

Citi has downgraded OPAP SA (OPAP:GA) stock to Neutral from Buy, despite increasing its price target to EUR20.50 from EUR19.00. This adjustment is primarily attributed to the company's substantial year-to-date share price appreciation of approximately 26% and an anticipated slowdown in earnings momentum. Citi analysts indicate that OPAP's near-term earnings growth will be constrained by difficult comparisons with a particularly strong performance in 2024. Consequently, the stock's next twelve months (NTM) price-to-earnings (P/E) ratio has re-rated to over 14 times, noted as the highest level for OPAP in recent years. Projections for 2025 to 2026 suggest gross gaming revenue (GGR) and earnings per share (EPS) growth will decelerate to a 3-4% range, which is expected to limit further stock-specific re-rating. The revised EUR20.50 price target corresponds to a P/E multiple of 15 times estimated 2025 earnings. While acknowledging OPAP's value and forecasting an estimated dividend yield of approximately 8% for 2025, Citi suggests that the potential for total shareholder return is now limited, supporting the Neutral stance.

Key Decisions for Investors

• Investors should weigh the implications of OPAP's 26% year-to-date rally and subsequent downgrade, considering the potential for limited further capital appreciation due to projected earnings deceleration.
• The forecasted 2025 dividend yield of approximately 8% remains an attractive component of total return, particularly if growth moderates as Citi anticipates, but should be balanced against the reduced growth outlook.
• Monitor OPAP's upcoming financial results closely, particularly GGR and EPS growth relative to the high 2024 comparative base and Citi's 3-4% growth forecast for 2025-2026, given the current NTM P/E ratio exceeding 14 times.