Credit Suisse downgrades Playtech to 'underperform'

12th Nov 2014 12:15

Credit Suisse said it saw further downside to the share price of gaming software group Playtech due to its acquisitive aspirations not being aligned with shareholder interests.Shares in the FTSE 250 firm slumped further on Wednesday after the company unveiled plans for a €315m convertible bond issue in order to pursue acquisitions."Playtech's board believes there are a number of opportunities ahead that will create significant value to shareholders," the company said.Analysts at Credit Suisse, however, said the Playtech's focus on M&A is "not necessarily aligned with shareholder interests" and downgraded its rating on the stock from 'neutral' to 'underperform'.They said that with the stock having de-rated by 25% over the past year, management would have started a share buyback if their interests were truly aligned with those of the shareholders."Playtech's share price rose 10% following its third-quarter update last month, however the shares are down circa 13% since then, on the back of regulatory concerns," the bank said."We also see lower top-line growth from new licensees, although we note that the company has successfully grown revenues by cross-selling more products to existing licensees."Credit Suisse has slashed its target price for the shares from 780p to just 580p.The stock was down 7% at 623p by 12:30.