On Friday, Stifel, a financial services firm, adjusted its outlook on Gambling.com Group Ltd. (NASDAQ: GAMB), reducing the price target to $13 from the previous $16, while still recommending the stock as a Buy. The adjustment comes after Gambling.com reported a 16% increase in Q1 adjusted EBITDA, surpassing expectations mainly due to higher margins.
However, the company also revised its full-year 2024 revenue and adjusted EBITDA forecasts downward by 8% and 9%, respectively. This change reflects the anticipated impact of a recent Google (NASDAQ:GOOGL) update on Gambling.com's growing media partnership strategy.
Despite the lowered guidance for FY24, the firm's analysts believe that the cost of sales (CoS) guidance provided by Gambling.com's management suggests a conservative approach, especially considering the potential benefits that could arise for the company's high-margin owned sites.
The analysts noted that the company's shares are expected to experience some downward pressure due to the unexpected guidance reduction but emphasized that the long-term outlook remains unchanged.
Moreover, comments from the company regarding fiscal year 2025 have led Stifel to maintain its Buy rating. Gambling.com's management has indicated that the consensus adjusted EBITDA of $54 million for FY25 is still achievable, despite the challenges posed to media partnerships. This suggests confidence in the company's ability to navigate the evolving SEO landscape effectively.
In light of these developments, Stifel has updated its financial model for Gambling.com. The firm has decreased its FY24 adjusted EBITDA estimate by 8%, while keeping its FY25 estimates unchanged. The new price target represents a $3 decrease from the previous target. Despite the recent adjustments, Stifel has reiterated its Buy rating on Gambling.com's stock, signaling continued optimism about the company's prospects.
InvestingPro Insights
In the wake of Stifel's recent price target adjustment for Gambling.com Group Ltd. (NASDAQ: GAMB), current data from InvestingPro offers additional context for investors. The company's market capitalization stands at $289.7 million, with a trailing twelve-month P/E ratio of 11.05, indicating a potentially favorable valuation in comparison to its earnings. Notably, Gambling.com has achieved an impressive gross profit margin of 91.61% over the last twelve months as of Q4 2023, underscoring the efficiency of its operations.
Two InvestingPro Tips highlight key points for consideration: Gambling.com holds more cash than debt on its balance sheet, providing financial stability, and the Relative Strength Index (RSI) suggests the stock is currently in oversold territory, which could indicate a potential buying opportunity for investors. Additionally, analysts predict the company will be profitable this year, aligning with Stifel's optimistic stance.
With the stock trading near its 52-week low and recent volatility reflected in a one-week price total return of -14.08%, investors may find the current share price an attractive entry point. To further explore these insights, investors can access additional InvestingPro Tips for Gambling.com at https://www.investing.com/pro/GAMB. Moreover, for those looking to deepen their analysis, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. Note that there are 9 additional InvestingPro Tips available, offering a comprehensive view of Gambling.com's financial health and market position.
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