Canaccord Genuity (TSX:CF, LSE:CF) analysts reduced their target price on Bragg Gaming Group (TSX:BRAG, NASDAQ:BRAG) Inc to C$21 per share from $30, while maintaining a ‘Speculative Buy’ rating on stock, which they said reflects the broader sell-off in comparable companies over the past six months.
The analysts did note, though, that Bragg Gaming increased its fiscal 2021 and 2022 guidance, which was driven primarily by greater-than-expected success in the company’s European business.
“Management highlighted the increase of its total addressable market (TAM) from $2.5 billion to $18 billion in fiscal 2022 as it benefits from geographical expansion,” the Canaccord analysts wrote.
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“While we don’t expect to see meaningful revenue contributions from markets like Canada, Italy, and the UK in the near term, given the success the company is seeing in the Netherlands (25% market share within one year), we believe the long-term potential for growth in these markets is substantial,” they added.
The analysts noted their lowered target price is based on 4.5 times fiscal 2023 revenue estimates, from 6 times previously, which is still a discount to peers that trade at about 5 times.
They do, however, expect Bragg Gaming to experience robust growth and increasing market penetration.
“We expect that management remains conservative on its expected ramp-up in North America, which we believe could provide upside to the current guidance numbers,” the analysts said.
Contact Sean at sean@proactiveinvestors.com