On Wednesday, Codere Online Luxembourg S.A. (NASDAQ:CDRO) saw its price target increased to $10.00, up from the previous $9.00, while the Buy rating on the stock was maintained. This adjustment by an analyst from Stifel comes after Codere Online reported second-quarter results that exceeded expectations. The company's net gaming revenue (NGR) for the quarter was 13% higher than anticipated, and its adjusted EBITDA reached a positive €1.3 million, surpassing the predicted loss of €2.8 million.
Codere Online's growth was noted to be well-distributed across different regions and product offerings, with Mexico and its iCasino operations being highlighted as the main drivers of growth, each reporting over 50% year-over-year NGR growth. The company also saw benefits from the Copa América and the Euro Cup in terms of online sports betting (OSB) handle and first-time deposits (FTDs). However, these gains were partially offset by lower hold-rates in Spain due to customer-friendly outcomes.
The company has updated its full-year 2024 NGR guidance to reflect a 4% increase, which amounts to an additional €7.5 million at the midpoint. Furthermore, Codere Online introduced an adjusted EBITDA forecast ranging between €2.5 million to €7.5 million, which aligns with the analyst's previous estimate of €5.8 million.
Codere Online's stock has seen a significant increase, nearly tripling year-to-date. This performance is attributed to the company's strong execution in its core markets of Spain and Mexico, a critical point of profitability, and speculation surrounding mergers and acquisitions amid regulatory changes in Latin America. Despite the stock's impressive year-to-date performance and growth prospects, its valuation is still considered attractive compared to its peers and past transactions in the industry. The analyst's outlook remains positive, with expectations for continued growth, leading to the decision to reiterate the Buy rating and raise the price target.
InvestingPro Insights
Following the positive momentum from Codere Online Luxembourg S.A. (NASDAQ:CDRO), the latest insights from InvestingPro provide a mixed picture for investors. With a market capitalization of $346.98 million and a challenging P/E ratio of -4.54, the company's financial health reflects some concerns. Despite an operating income margin at a negative 29.6% for the last twelve months as of Q2 2024, Codere Online has demonstrated a strong performance in its stock price, boasting a 137.15% return over the past year and trading close to its 52-week high at 96.47% of that value. The company's stock price has experienced a notable uptick, with a 74.89% return over the last six months and a 16.77% return over the last three months, although recent weeks have seen a slight decline.
An InvestingPro Tip notes that while analysts expect sales growth this year, they do not anticipate the company will be profitable within the same timeframe. This aligns with the recent positive sales guidance update from Codere Online, yet it also underscores the challenges the company faces in translating sales into net profits. Additionally, the company's lack of dividend payments may influence investors seeking income-generating investments.
For those considering an investment in Codere Online, there are 7 additional InvestingPro Tips available that provide further insight into the company's performance and potential. These tips, along with a detailed analysis, can be found on the InvestingPro platform, offering a comprehensive view for a well-informed investment decision.
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