When hunting for the best shares to buy now, I always like to begin with the worst-performing stocks of the year. Why? Because often these can offer tremendous recovery potential, leading to explosive results relatively quickly. Just take a look at Rolls-Royce – in the space of three years, the stock’s up around 1,500%.
2025’s proven to be a good year for many UK shares, with the FTSE 100 now at record highs. But not every business has been so fortunate. Back in May, Playtech (LSE:PTEC) saw its stock price collapse 60% in one day!
That’s undeniably a painful loss for existing shareholders. But following its latest results, the tide might be turning. Institutional analysts are issuing Buy recommendations, with many raising their share price targets. One even expects the stock to almost double within the next 12 months.
So is now the time to consider buying?
What happened to Playtech
As a quick reminder, Playtech’s a software enterprise for online gaming solutions. It’s technology powers some of the largest gambling platforms, enabling digital casinos, poker, bingo, and sports betting. This makes Playtech a critical piece of the value chain within the online gambling sector.
So why did the stock implode earlier this year? With concerns brewing about growth and margins, management began restructuring its business to streamline operations. This involved the sale of its Snaitech business to Flutter Entertainment, which flooded the balance sheet with cash.
Management then decided to return a large chunk of this capital back to shareholders, announcing an enormous €1.8bn special dividend. It was a clear signal that leadership was confident about its reformed business. But it seems the credit rating agencies disagreed.
Standard & Poor’s downgraded the firm’s debt rating below investment grade, citing concerns over its leverage, rising regulatory costs, and margin compression. Subsequently, with €1.8bn leaving the coffers the next day, investors began questioning the group’s short-term liquidity, which ultimately culminated in an enormous single-day share price crash.
Why so bullish?
Since this sudden surge in volatility, it seems Playtech’s long-term confidence may not have been misplaced after all. In its latest results, management raised full-year guidance, sparking a series of bullish upgrades from institutional investors.
- Deutsche Bank raised its share price target from 417p to 433p
- Peel Hunt reaffirmed its Buy rating with a 510p price target
- Jefferies raised its earnings projections and issued a 670p share price target – 99% higher than current levels
Digging deeper, this new wave of optimism seems to be driven by the group’s expansion into the high-growth US and Latin American markets. At the same time, debt reduction progress has continued while cash reserves have started to be replenished, resulting in a stronger balance sheet.
Simply put, it seems Playtech’s drastic restructuring was a success.
The firm isn’t quite out of the woods yet. Expanding into new territories comes with significant execution risk, especially for a highly regulated business. Furthermore, the group’s credit rating has yet to improve, resulting in higher borrowing costs, introducing refinancing risk.
Nevertheless, if the analyst’s projections are correct, Playtech could deliver explosive recovery returns for patient investors. That’s why I think investors may want to take a closer look.
