On Thursday, Stifel has increased the price target for Gambling.com Group Ltd. (NASDAQ: GAMB) shares to $17, up from the previous target of $14, while reaffirming a Buy rating on the stock. The adjustment comes in response to Gambling.com's recent acquisition announcement.
The stock, currently trading near its 52-week high with a market capitalization of $549 million, has demonstrated impressive momentum with a 68% return over the past six months. According to InvestingPro analysis, the company maintains excellent financial health with 8 key insights available to subscribers.
This morning, Gambling.com disclosed its plan to acquire Odds Holdings, the parent company of OddsJam, for an initial payment of $80 million, comprising $70 million in cash and $10 million in equity. OddsJam operates a subscription-based platform that provides various betting tools, with a feature that identifies positive expected value bets being its most popular offering.
The company's strong financial position, with an impressive 91.6% gross profit margin and 27.6% revenue growth in the last twelve months, suggests its capability to integrate this acquisition effectively. Discover more detailed insights with InvestingPro's comprehensive research report, available for 1,400+ US stocks.
The acquisition agreement includes up to $80 million in additional earnout consideration, contingent on the performance in 2025 and 2026. This arrangement values the purchase at approximately seven times the projected adjusted EBITDA for both 2024 and 2026, assuming a 20% year-over-year growth as forecasted by the management.
To finance the upfront cash portion of the deal, Gambling.com anticipates utilizing a new bank debt facility. The company also has the flexibility to satisfy up to half of the earnout consideration with equity. The team from Odds Holding is set to join Gambling.com, ensuring a smooth transition and continuity post-acquisition.
The completion of this strategic acquisition is expected on January 1, 2025, as per the announcement made by Gambling.com. The move is seen as a significant expansion of Gambling.com's product offerings in the betting tools sector.
In other recent news, Gambling.com Group has made a significant stride by entering into a definitive agreement to acquire Odds Holdings, Inc. The acquisition, which is expected to close in early 2025, involves an initial payment of $80 million to Odds Holdings stockholders, with an additional $80 million tied to performance through 2026. This strategic move is set to expand Gambling.com Group's online gambling industry footprint, adding new recurring revenue streams from both consumer and enterprise clients.
In terms of financial performance, Gambling.com Group reported a record Q3 revenue of $32.1 million, a 37% increase from the same quarter last year, and raised its adjusted EBITDA to $12.6 million, marking a 108% year-over-year increase. These recent developments led Truist Securities to revise the company's stock price target from $13.00 to $16.00, maintaining a Buy rating on the company's shares.
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