Codere Online is overlooked, but it could be the fairness winner of the game

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Posted: Jan 4, 2022, 9:53 a.m.

Last update on: January 4, 2022, 9:53 a.m.

Online casino and online sports betting company Codere Online (NASDAQ: CDRO) has just had its best day as a publicly traded stand-alone company and is attracting the attention of at least one analyst.

Codere Online
Codere Online highlighted on the Nasdaq Marketplace site last month. An analyst believes the stock offers significant upside potential. (Photo: Twitter)

While sales-side coverage of the game’s name remains sparse following its Dec. 1 split from a Special Purpose Acquisition Company (SPAC), Codere Online has a fan of Stifel analyst Jeffrey Stantial initiating coverage of the stock with a “buy” and a target price of $ 10. This implies an increase of around 43% from the January 3 close.

Codere Online, founded in 2014, is a unit of the Codere Group – the only listed Spanish company in the gaming industry. The online operator is the first Internet gaming entity in Latin America to be publicly traded in the States United and it is this concentration on this region that may encourage some investors to neglect the action.

We believe that CDRO appears well positioned to capitalize on secular growth trends in the lesser-known, but also high-growth online gambling market in Latin America, benefiting from deep local operational expertise and a strong presence. omnichannel, ”Stantial said.

Last month, the operator announced a five-year deal to offer sports betting in Argentina, where it also sponsors River Plate football club. In this country, Codere offers betting on a variety of local and national sporting events as well as international competitions.

Codere comparisons are inevitable, but dig deeper

Codere Online is an operator of outright iGaming games and sports betting – a status given to some once-beloved companies now fighting in the United States, several of which have gone public through check transactions in White.

However, investors should be careful drawing comparisons between Codere and DraftKings (NASDAQ: DKNG) or Rush Street Interactive (NYSE: RSI), as two examples. Codere’s primary markets are Buenos Aires, Colombia, Italy, Mexico, Panama, and Spain, all destinations that don’t require the marketing expense to compete in the United States. Italy and Spain, the third and fourth largest economies in the euro area, respectively, are mature betting markets.

Stantial says comparisons to other pure stocks in this area could lead to deleted multiples for Codere Online.

“Meanwhile, stocks are trading well below most of their pure-play peers, which we believe is partially driven by factors and reduces CDRO’s growth potential and favorable competitive positioning,” notes the analyst.

He adds that as more market participants learn about the trader’s story, stocks could ‘drop back’ to $ 10 which is supposed to be the bottom for prices. SPAC actions.

Codere Online appears rich in catalysts

Probably due to the preference for the home country, many American investors are unaware of the betting opportunities offered in Latin America, but online games have registered a compound annual growth rate of around 20% over eight years in Codere’s main markets.

Additionally, the fact that Codere is already operational in the region is a plus as market watchers expect governments in the region to be strict on the distribution of gaming licenses, potentially giving Codere a competitive advantage. .

Stifel’s Stantial highlights other catalysts, including “the current valuation reduces CDRO’s growth potential and favorable competitive positioning, with stocks trading below most US and European peers and the Hispanic population. Under-focused US presents an opportunity for medium-term expansion not factored into our forecasts. “


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