On Friday, Benchmark, a financial analysis firm, revised its stock price target for Bragg Gaming Group Inc. (NASDAQ: BRAG), reducing it from $8.00 to $4.00, yet maintained a Speculative Buy rating for the stock. This adjustment follows the company's reported outcomes for the third quarter, which surpassed consensus expectations in terms of revenue and profit. Moreover, Bragg Gaming reaffirmed its growth outlook for 2024.
The company's performance in the third quarter was highlighted by its expansion in the U.S. market and the accelerated growth of its proprietary content, which have both contributed to an increase in revenue and sequential margin improvement. The positive results are seen as a reflection of Bragg Gaming's strategic initiatives and operational strengths.
Looking to the future, Bragg Gaming is expected to encounter significant growth opportunities in the U.S. and Brazil. These opportunities are supported by factors such as an increased output of content and the company's entry into newly regulated markets. These catalysts are anticipated to drive further top-line gains for Bragg Gaming.
The adjustment in the price target to $4.00 comes after the conclusion of a strategic review by Bragg Gaming. The review has led to the removal of the acquisition premium consideration from the company's valuation. This change is indicative of the revised expectations and outlook for the company's stock by Benchmark.
In summary, Bragg Gaming's solid third-quarter performance, coupled with its promising growth prospects in key markets, has been acknowledged by Benchmark in their latest analysis. However, the removal of acquisition premium consideration has resulted in a lower price target for the company's shares, while the Speculative Buy rating remains in place.
In other recent news, Bragg Gaming Group disclosed a robust Q3 2024 earnings report, highlighting a 16% increase in year-over-year revenue. The company's CEO, Matevz Mazij, announced the conclusion of a strategic review, affirming that the current strategy continues to be the best way to enhance shareholder value.
Bragg Gaming Group is projecting continued growth, especially in the emerging Brazilian market, with plans to launch its Player Account Management (PAM) platform there within the next 12 to 24 months.
The company's Q3 revenue reached EUR 26.2 million, with a gross profit increase of 18% to EUR 14 million. Notable growth was reported in the U.S. market, with a 40% increase in proprietary content revenue. The company also launched its sixth PAM customer in the Netherlands and expanded into new U.S. markets, including Pennsylvania, Ontario, and New Jersey.
Bragg Gaming Group maintains its full-year guidance, expecting robust growth in the U.S. and expansion into new markets. The company's revenue guidance is set at EUR 102 million to EUR 109 million, with adjusted EBITDA expected to be between EUR 15.2 million and EUR 18.5 million. These recent developments reflect Bragg Gaming Group's focus on key markets in the U.S., Canada, Latin America, and Europe, and its plans for expansion into emerging markets.
InvestingPro Insights
To complement Benchmark's analysis of Bragg Gaming Group Inc. (NASDAQ: BRAG), recent data from InvestingPro offers additional context to the company's financial situation and market performance.
As of the last twelve months ending Q2 2024, Bragg Gaming reported revenue of $101.34 million, with a modest growth rate of 2.64%. This aligns with the company's reported expansion in the U.S. market and growth in proprietary content mentioned in the article. However, the company's operating income for the same period was -$4.05 million, indicating ongoing challenges in achieving profitability.
InvestingPro Tips highlight that Bragg Gaming holds more cash than debt on its balance sheet, which could provide financial flexibility as the company pursues growth opportunities in the U.S. and Brazil. However, the stock has taken a significant hit recently, with a 29.66% decline in the past week and a 35.06% drop over the last month. This recent performance may explain Benchmark's decision to lower the price target.
It's worth noting that InvestingPro offers 11 additional tips for Bragg Gaming, providing a more comprehensive analysis for investors interested in delving deeper into the company's prospects.
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