Stifel keeps Brightstar Lottery a top pick after Q3 miss, cuts target price to $18
Investing.com — Stifel reiterated Brightstar Lottery as a top investment pick, arguing that the company’s recent earnings setback presents an attractive opportunity for investors as digital lottery adoption accelerates and concerns over key contract renewals gradually ease.
The brokerage maintained its Buy rating and Select List investment thesis, despite lowering its price target to $18 from $19 following weaker-than-expected sales growth and a reduction in 2026 guidance. With shares trading at $9.59, Stifel sees significant upside, arguing that investors are underestimating the company’s longer-term growth potential and overstating the risks surrounding its lottery contracts.
Stifel said the third-quarter weakness was largely attributable to foreign exchange movements, temporary disruptions and timing issues rather than a deterioration in the underlying business. Brightstar reported adjusted EBITDA of $289 million, slightly above the brokerage’s $287 million estimate, while revenue of $607 million fell short of its $610 million forecast.
The company lowered its 2026 revenue guidance to between $2.435 billion and $2.455 billion and adjusted EBITDA guidance to between $1.14 billion and $1.16 billion. Stifel estimates that foreign exchange movements account for roughly half of the EBITDA revision, with softer same-store sales and delays in Italy’s digital lottery rollout explaining the remainder.
The brokerage sees digital lottery adoption as a key driver of future growth. Brightstar has three new iLottery platform launches planned over the next year, including two in the United States and one internationally. Stifel also highlighted new growth initiatives in Italy, including leased self-service lottery terminals and an expansion into proximity services, which could provide additional revenue streams and improve returns on the company’s €2.23 billion Italian Lotto licence investment.
Contract renewals represent another potential catalyst. Brightstar secured a two-year extension to its New York lottery contract through August 2028, while a proposed Italian budget law includes a 15-month extension of its Scratch & Win licence through December 2029, subject to parliamentary approval. Stifel views the developments as economically favourable, although they could delay the removal of contract-related uncertainty until 2027 and beyond.
