When looking for the best stocks to buy now, I always like to start with the worst-performing stocks of the year. Why? Because they can often provide enormous recovery potential, leading to amazing results relatively quickly. Just look at Rolls Royce – In three years, the stock has risen by about 1,500%.

2025 is proving to be a good year for many UK stocks, with… FTSE 100 index Now at record levels. But not all businesses were so lucky. Back in May, Playtech (LSE:PTEC) saw its share price collapse by 60% in one day!

This is undoubtedly a painful loss for existing shareholders. But after the latest results, the tide may be starting to turn. Institutional analysts issue buy recommendations, with many raising their share price targets. One expects the stock to nearly double over the next 12 months.

Is now the time to think about buying?

What happened to Playtech?

As a quick reminder, Playtech is an online gaming solutions software company. It's technology that powers some of the biggest gambling platforms, enabling digital casinos, poker, bingo and sports betting. This makes Playtech an important part of the value chain in the online gambling sector.

So why did the stock explode earlier this year? As concerns about growth and margins increased, management began restructuring its business to streamline operations. This included the sale of its Snaitech business to Flutter Entertainmentwhich led to the balance sheet being flooded with cash.

Management then decided to return a significant portion of this capital to shareholders, declaring a massive special dividend of €1.8 billion. It was a clear signal that the leadership was confident in its reformed actions. But it seems that the credit rating agencies did not agree with this.

Standard & Poor's downgraded the company's debt to below investment grade, citing concerns about leverage, high regulatory costs and margin pressure. Later, as €1.8 billion left the group's coffers the next day, investors began to question the group's short-term liquidity, which ultimately led to a massive collapse in stock prices in one day.

Why so bullish?

Since this sudden increase in volatility, it appears that Playtech's long-term confidence may not have been so misplaced after all. In its latest results, management raised its full-year guidance, sparking a series of bullish upgrades from institutional investors.

• Deutsche Bank It raised its share price target from 417p to 433p
• Peel Hunt He reaffirmed a buy rating with a price target of 510 pence
• Jefferies It raised its earnings forecast and issued a share price target of 670p – 99% above current levels.

Digging deeper, this new wave of optimism appears to be driven by the group's expansion into high-growth US and Latin American markets. At the same time, progress on debt reduction continued while cash reserves began to be replenished, strengthening the balance sheet.

Simply put, Playtech's radical restructuring appears to have been a success.

The company isn't out of the woods yet. Expanding into new territories involves significant execution risks, especially for a highly regulated business. Moreover, the Group's credit rating has not yet improved, resulting in higher borrowing costs and introducing refinancing risks.

However, if analyst forecasts hold true, Playtech could deliver massive recovery returns for patient investors. That's why I think investors might want to take a closer look.