Shore Capital left its forecasts for Rank Group unchanged after the casinos and bingo operator posted 5% first-quarter revenue growth.
The broker warned, however, that a potential increase in gambling taxes at the Budget poses a significant threat to the company's recovery.
Shore Capital retained its adjusted pre-tax profit forecast of £54.7 million for the financial year to June 2027, based on assumed like-for-like net gaming revenue growth of between 4% and 5%.
Despite that top-line growth, higher Remote Gaming Duty was already creating a net headwind of around £20 million, underpinning an expected decline in operating profit of approximately £9 million year on year.
Like-for-like net gaming revenue rose 5% to £216.1 million in the quarter, with digital up 6% to £64.9 million and venues up 5%.
Grosvenor casino venues led the way, with like-for-like revenue up 6% to £108.1 million, driven by 14% growth in gaming machines.
Mecca bingo venues were flat at £32.2 million, with hot weather partly to blame, though Shore Capital expects conditions to improve as weather patterns normalise.
Three Grosvenor venues in Sunderland, Reading and Swansea were closed during the quarter as no longer economically viable.
Shore Capital estimated that a hypothetical increase in Machine Games Duty from 20% to 40% would create gross headwinds of £25 million at Grosvenor and £10 million at Mecca.
That could delay Rank's medium-term target of at least £100 million in operating profit, though the broker argued Budget risk looked largely priced in.
The shares were trading at 74p, down 43% over the past year.
