JP Morgan assigns price target of $5.15 for The Lottery Corp

Analysts at JP Morgan believe few companies can raise capital as effectively as the Australian lottery operator.

Australia.- Praised as Australia’s largest lottery company and one of the top-performing lottery companies in the world, The Lottery Corp has been assigned an overweight rating and a price target of $5.15 by analysts at JP Morgan.

According to analysts, few companies can raise capital as effectively as the Australian lottery operator. They added the company’s value lies in its lightweight capital structure.

JP Morgan stated: “We believe that TLC will perform better than most in a recession, and given its ability to generate strong returns and free cash flow there is upside to the targeted dividend payout ratio of 70-90 per cent of net profit after tax.”

Regarding the transition to digital, analysts said that basing future performance on trends in recent years during the Covid-19 pandemic could be misleading. It noted that retail closures delivered huge one-time gains, which were further amplified by stimulus measures.

The Lottery Corporation was created following the Tabcorp demerger in 2022. It covers lottery while New Tabcorp comprises the wagering, media and gaming services.

Tabcorp first announced plans to spin off its lottery and keno divisions in July 2021 following a strategic review of its operations. The review examined Tabcorp’s structure and ownership options to create more value for shareholders, including a possible sale of its gaming and media businesses. However, the group finally decided to spin off the lottery business.