Cirsa called ‘gold mine’ as Bernstein starts coverage at “outperform,” with €20.20

Bernstein has initiated coverage on Cirsa Enterprises (BME:CIRSA) with an "outperform" rating and a price target of €20.20, representing a 32% upside from its August 28 close. The brokerage highlights Cirsa's leadership in regulated gaming markets across Spain, Italy, and Latin America, projecting strong financial growth with revenues rising from €2.15 billion in 2024 to €2.50 billion in 2026, and significant increases in EBITDA and adjusted EPS over the same period. Valuation models show attractive declining multiples, with Bernstein attributing Cirsa's potential to its omnichannel strategy, disciplined expansion, strong cash conversion, and diversified regulatory footprint.

Analysis

Bernstein has initiated coverage on Cirsa Enterprises (BME:CIRSA) with a strongly bullish outlook, assigning an "outperform" rating and a €20.20 price target, which implies a 32% upside from its late August valuation. The core of the thesis is Cirsa's position as a leader in regulated gaming markets across Spain, Italy, and Latin America, supported by a diversified mix of physical and online assets. Bernstein's financial model projects consistent top-line growth, with revenue forecast to increase from €2.15 billion in 2024 to €2.50 billion in 2026. More significantly, earnings are expected to expand at a faster rate, with EBITDA projected to grow from €699 million to €827 million and adjusted EPS forecasted to more than double from €0.84 to €1.71 over the same period. This projected earnings acceleration is central to the value case, as it implies a significant contraction in valuation multiples; the adjusted P/E ratio is estimated to fall from 18.2x in 2024 to an attractive 9.0x by 2026, while the EV/EBITDA multiple is seen compressing from 7.1x to 6.0x. The positive outlook is further underpinned by the firm's omnichannel strategy, strong cash conversion, and a diversified footprint that offers resilience against localized regulatory shifts.

Key Decisions for Investors

• Investors with an appetite for European mid-cap value and growth may consider initiating a long position, given the significant 32% upside to Bernstein's price target and the compelling earnings growth trajectory.
• The investment case hinges on the realization of strong forward earnings; it is critical to monitor Cirsa's quarterly performance against Bernstein's projections, particularly the forecasted adjusted EPS growth from €0.84 in 2024 to €1.71 in 2026.
• The analysis points to a significant valuation re-rating opportunity as earnings grow, so investors should assess if the current market price adequately discounts this potential for the P/E multiple to contract to 9.0x by 2026.
• Despite Bernstein highlighting resilience, the gaming sector carries inherent regulatory risk, so investors should track legislative developments in Cirsa's key markets of Spain, Italy, and Latin America as they could impact future profitability and the viability of the price target.