On Monday, Stifel analysts maintained a Buy rating on Codere Online Luxembourg S.A. (NASDAQ:CDRO) with a price target of $10.00. Currently trading at $6.77, the stock has shown remarkable strength with a 130% gain over the past year.
According to InvestingPro data, analyst targets range from $10 to $14, suggesting potential upside from current levels. The firm's stance comes after Codere Online announced the resignation of its auditor, Marcum, on Friday. Marcum's departure, which was formally submitted to the Board of Directors on December 20, 2024, follows a notification from NASDAQ about a potential delisting of Codere Online's shares.
The company is scheduled for a NASDAQ appeal hearing on January 16, 2025. With a market capitalization of $307 million and an overall financial health score rated as 'FAIR' by InvestingPro, investors seeking deeper insights can access the comprehensive Pro Research Report, which provides detailed analysis of CDRO's financial position and growth prospects.
The auditor's resignation was attributed to difficulties in verifying the completeness of information regarding certain control deficiencies from 2021 to 2022, primarily related to Codere Online's third-party platform providers. Codere Online is currently in the process of selecting a new auditor, aiming to finalize the choice before the upcoming NASDAQ hearing.
Stifel analysts suggest that if Codere Online can ensure a seamless transition to a new auditor, the company may be able to regain compliance and avert delisting.
Despite the tight timeline and the reliance on a successful appeal at the NASDAQ hearing, the analysts have chosen not to adjust their investment model or the $10 target price for Codere Online's stock at this time. They indicated that they will re-evaluate their position as more details become available.
In other recent news, Codere Online demonstrated robust financial performance in the third quarter of 2024, with a 20% year-over-year increase in net gaming revenue to €52 million. This growth was primarily driven by operations in Mexico and Spain, which experienced notable gains in customer acquisition and retention. The company also reported a positive adjusted EBITDA of $1.5 million for the quarter.
Stifel reaffirmed its Buy rating on Codere Online, maintaining a $10.00 price target. The company's third-quarter results surpassed expectations, with a net gaming revenue 5% higher than Stifel's forecast and an adjusted EBITDA of €1.5 million, exceeding the anticipated €1.1 million. Stifel noted Codere Online's strategic focus on the potentially lucrative markets of Spain and Mexico provides a strong foundation for organic growth and high returns.
Codere Online has updated its financial guidance for FY24, adjusting its net gaming revenue and adjusted EBITDA projections to the higher end of the previously stated ranges. This adjustment effectively increases the midpoint guidance by 1% for net gaming revenue and 25% for adjusted EBITDA. Stifel has also adjusted its 2024/25 net gaming revenue estimates upward by 1%, reflecting the company's positive outlook.
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