Benchmark maintains Buy on Gambling.com with $18 target

On Friday, Benchmark analyst Mike Hickey confirmed a Buy rating for Gambling.com Group Ltd. (NASDAQ:GAMB) shares, maintaining a price target of $18.00. According to InvestingPro analysis, the stock appears undervalued, with analyst targets ranging from $17 to $20. The company maintains a "GREAT" financial health score of 3.47 out of 5, suggesting strong fundamentals. This endorsement follows Gambling.com’s announcement of robust financial performance for the first quarter of 2025, with the company reporting revenues of $40.6 million and Adjusted EBITDA (AEBITDA) of $15.9 million. These figures slightly surpassed the consensus estimates. InvestingPro data reveals impressive gross margins of 94.55% and strong revenue growth of 24.67% over the last twelve months.

The company’s recurring revenue exhibited growth, accounting for 24% of the total revenue. New Depositing Customers (NDCs) also saw a record high, reaching 138,000. Hickey noted that Gambling.com is on track to meet the midpoint of its revenue guidance and the lower end of its AEBITDA projections for 2025. This is attributed to a shift towards media partnerships, which has applied a modest pressure on gross margins.

Looking forward, Hickey highlighted potential growth opportunities for Gambling.com. These include the expected launches in Missouri and Alberta, which could contribute additional revenue and AEBITDA. Furthermore, the evolving prediction market in the U.S. presents a significant opportunity for the company, positioning Gambling.com as a leader poised to capitalize on this emerging vertical. The company’s attractive PEG ratio of 0.19 suggests strong growth potential relative to its current valuation. Discover more growth metrics and 10+ exclusive ProTips with InvestingPro.

Despite these prospects, Hickey suggested that management might consider a modest restructuring to address the anticipated AEBITDA trending towards the lower end of the $67 million to $69 million range. He proposed a 5% to 10% reduction in headcount, which could be feasible due to recent acquisitions, personnel overlaps, and productivity gains from AI integration. This move could help in maintaining AEBITDA margins in the face of short-term challenges.

In other recent news, Gambling.com Group reported first-quarter earnings that exceeded analyst expectations, with adjusted earnings per share of $0.46 compared to the consensus estimate of $0.24. Revenue for the quarter was a record $40.6 million, slightly above the projected $40.38 million, representing a 39% year-over-year increase. This growth was driven by a 29% rise in new depositing customers and a significant boost in sports data services revenue, which surged 405% due to the acquisitions of OddsJam and OpticOdds. Despite these positive results, Macquarie adjusted its price target for Gambling.com from $19.00 to $18.00, while maintaining an Outperform rating, following the company’s earnings release.

Macquarie noted the company’s year-over-year revenue and EBITDA growth of 39% and 55%, respectively, which slightly surpassed consensus estimates. Stifel analysts also maintained their Buy rating with an $18.00 price target, highlighting the company’s resilience and strategic shift towards subscription revenue. They acknowledged a 1% forecasted decrease in adjusted EBITDA for fiscal years 2025 and 2026 due to technology investments but remained optimistic about the company’s financial prospects. Gambling.com reiterated its full-year 2025 guidance, projecting revenue between $170 million and $174 million, with adjusted EBITDA expected to grow by 35% to 40% year-over-year. The company continues to anticipate market-share gains in the UK and European markets, as well as an easier competitive landscape in North America.

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