On Thursday, DoubleDown Interactive Co Ltd. (NASDAQ: DDI) received a positive assessment from B.Riley, as the firm resumed coverage with a Buy rating and a price target of $24.00. The social casino company's stock is being recognized for its accelerating free cash flow (FCF) generation and recent market share gains in what is described as a stable social casino marketplace.
The analyst highlighted DoubleDown Interactive's additional revenue growth stemming from its newly acquired real-money gaming platform, which is considered highly synergistic. Although the firm's EBITDA estimates do not account for contributions from direct-to-consumer initiatives, CY25E/CY26E SuprNation EBITDA, or potential social casino forward Total Addressable Market (TAM) growth, the company's valuation at 2.7x/1.8x CY24E/CY25E EV/EBITDA is seen as significantly disconnected from its asset-light FCF growth profile.
The forecast for DoubleDown Interactive by CY26E, which does not include mergers and acquisitions or dividend issuances, projects a net FCF per share of approximately $12. This figure is notably close to the company's current trading price, underscoring the potential for a strong investment opportunity. The firm's stable core business, robust net FCF generation, and balance sheet flexibility, especially regarding ongoing dividend discussions, are factors contributing to the positive outlook.
B.Riley's analysis suggests that expected revenue and EBITDA growth, along with the potential for upward estimate revisions, make DoubleDown Interactive an attractive stock in the present market climate. The company's position is seen as particularly favorable when compared to its peers, given its financial performance and growth prospects.
In other recent news, DoubleDown Interactive reported a positive financial performance for Q1 2024, with total revenues reaching $88.1 million, a significant portion of which was contributed by its flagship free-to-play social casino games, which generated $79.8 million. The recent acquisition of SuprNation added an additional $8.3 million to the revenue stream. The company's adjusted EBITDA saw a notable year-over-year increase of 26%, reaching $31.9 million, while net income was reported at $30.4 million.
In addition to these financial highlights, DoubleDown Interactive is planning to launch Mission Pass in Q2 to offer players quests in their casino gameplay. The company has expressed interest in exploring expansion into new gaming categories and potential mergers and acquisitions. DoubleDown Interactive ended the quarter with a strong cash position, boasting $310 million in cash and cash equivalents.
InvestingPro Insights
Amid the favorable assessment from B.Riley, DoubleDown Interactive Co Ltd. (NASDAQ: DDI) demonstrates financial resilience and growth potential. The company's market capitalization stands at a robust $639.73 million, reflecting its substantial presence in the market. Investors may find the company's low Price-to-Earnings (P/E) ratio of 5.97 for the last twelve months as of Q1 2024 particularly appealing, indicating that the stock might be undervalued relative to its earnings. Additionally, the PEG ratio of 0.04 during the same period suggests that DoubleDown Interactive's stock price is in line with its expected earnings growth, making it an attractive option for value investors.
Among the InvestingPro Tips, two stand out in light of the article's content. The company holds more cash than debt, which aligns with B.Riley's emphasis on DoubleDown Interactive's strong balance sheet flexibility. Furthermore, analysts predict the company will be profitable this year, reinforcing the positive outlook and potential for investment opportunity highlighted by B.Riley. With the company's stock having experienced a significant price uptick of 49.68% over the last six months and a year-to-date return of 75.66%, these metrics underscore the company's robust performance and market confidence.
For those considering an investment, there are additional InvestingPro Tips available, which can provide deeper insights into DoubleDown Interactive's financial health and market prospects. By using the coupon code PRONEWS24, investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a comprehensive set of tools and analyses to inform their investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.