On Thursday, Stifel, a financial services firm, increased its price target on shares of Codere Online Luxembourg S.A. (NASDAQ: CDRO) to $9.00 from $8.00, while keeping a Buy rating on the stock. The adjustment followed Codere Online's first-quarter performance, which surpassed expectations and demonstrated significant growth and profitability.
Codere Online reported a robust first quarter, with net gaming revenue (NGR) exceeding Stifel's estimates by 21% and an adjusted EBITDA of +€1.7 million, which was notably higher than the anticipated €1.9 million loss.
This marks the company's first quarter of positive consolidated adjusted EBITDA. Growth was observed across all regions, with Mexico noted as the primary growth driver. Investments in product development and user acquisition have consistently yielded over 40% iCasino NGR growth.
In light of these results, management has revised its full-year 2024 NGR guidance upwards by 5% or €10 million at the midpoint. However, they maintained their qualitative guidance for adjusted EBITDA and free cash flow (FCF), both expected to remain positive, despite planned user acquisition investments during major summer sports events such as the Euro Cup, Copa América, and the Olympics.
Stifel's analyst highlighted the company's ability to maintain over 30% NGR growth and steadily increase margins. Despite potential volatility in stock performance due to market sentiment around mergers and acquisitions, the analyst sees a clear path for the stock to surpass $10 per share.
Consequently, Stifel reiterated its Buy rating and raised its 2024/25 estimated NGR by 5% and 2%, respectively, leading to the new price target of $9.00, a $1.00 increase from the previous target.
InvestingPro Insights
Following Stifel's optimistic outlook on Codere Online Luxembourg S.A. (NASDAQ: CDRO), InvestingPro data and tips provide additional insights into the company's financial health and market performance. With a market capitalization of $338.6 million and a significant revenue growth of 51.93% in the last twelve months as of Q2 2023, the company demonstrates strong growth potential. Impressively, the gross profit margin stands at 87.31%, underscoring the company's ability to maintain profitability in its operations.
InvestingPro Tips highlight that CDRO holds more cash than debt on its balance sheet and analysts anticipate sales growth in the current year, reinforcing the positive sentiment expressed by Stifel. However, analysts do not expect the company to be profitable this year, which is reflected in a negative P/E ratio of -4.54. Despite this, the company's stock has seen a robust return of 158.65% over the last year, indicating investor confidence in its growth trajectory.
For investors seeking a deeper dive into Codere Online's performance and future outlook, additional InvestingPro Tips are available, providing comprehensive analysis and metrics. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a wealth of information including 12 more InvestingPro Tips for CDRO.
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