On Friday, B.Riley adjusted its outlook on Gambling.com Group Ltd. (NASDAQ: GAMB), lowering the price target to $13 from the previous $14.50, but kept a Buy rating on the company's stock. The revision follows Gambling.com Group's recent earnings report, which showed a 15% beat to consensus EBITDA estimates, yet prompted a downward revision of future EBITDA projections by 9% for the calendar year 2024 and 7% for 2025.
The company's first-quarter performance exceeded expectations due to strong margins fueled by growth across various regions. However, Gambling.com Group has reduced its revenue guidance for the calendar year 2024 from the range of $129 million to $133 million down to $118 million to $122 million. Similarly, EBITDA guidance has been adjusted from $44 million to $48 million to a new range of $40 million to $44 million.
The change in financial outlook is attributed to an upcoming policy change by Google (NASDAQ:GOOGL) in May 2024, which will impact the treatment of commercial content online and is expected to reduce the effectiveness of Gambling.com Group's media partnerships.
Despite the anticipated negative impact on short-term estimates, B.Riley notes the potential for increased market share gains. This is due to an expected improvement in the performance of Gambling.com Group's owned sites, as competitors who rely more heavily on media partnerships may face greater challenges.
Gambling.com Group's management has expressed confidence in meeting the consensus EBITDA estimates for the calendar year 2025, which stood at $54 million at the time of the company's earnings call. In light of the new estimates and the upcoming changes in the digital advertising landscape, B.Riley has set the new price target at $13 while affirming the positive Buy rating on the stock.
InvestingPro Insights
The recent adjustment of Gambling.com Group Ltd.'s (NASDAQ: GAMB) financial outlook by B.Riley has been met with mixed reactions from the market. In light of this, real-time data from InvestingPro offers a deeper insight into the company's financial health and potential. With a market capitalization of $289.7 million and an adjusted P/E ratio for the last twelve months as of Q4 2023 at 11.05, the company presents an interesting valuation. Furthermore, the impressive gross profit margin of 91.61% during the same period underlines the company's strong profitability in its operations.
Among the InvestingPro Tips, two notable points stand out. Firstly, Gambling.com Group holds more cash than debt on its balance sheet, which is a reassuring sign of financial stability. Secondly, the company's stock is currently trading near its 52-week low and the Relative Strength Index (RSI) suggests that the stock is in oversold territory, potentially indicating a buying opportunity for value investors.
For those interested in a more comprehensive analysis, there are additional InvestingPro Tips available that could further inform investment decisions. The company is predicted to be profitable this year and has been profitable over the last twelve months, which may appeal to investors looking for established earnings amidst market uncertainties. To explore these insights and more, consider utilizing the InvestingPro platform and get an additional 10% off a yearly or biyearly Pro and Pro+ subscription with coupon code PRONEWS24.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.