Benchmark maintains Buy on SGHC stock with $12 target

On Wednesday, Benchmark analysts maintained their Buy rating and $12.00 price target for SGHC Limited (NYSE: SGHC), expressing confidence in the company’s performance. Currently trading at $7.28, the stock has delivered an impressive 147% return over the past year. The firm highlighted SGHC’s positive execution risk in the first quarter of 2025, noting that early indicators suggest the consensus estimates might be on the conservative side.

SGHC has demonstrated strong retention rates, consistent new-customer acquisition, and healthy engagement trends, all contributing to robust revenue generation of $1.76 billion with an impressive 49.6% gross profit margin. According to InvestingPro analysis, the company holds more cash than debt on its balance sheet and maintains strong cash flows to cover interest payments. The company’s marketing efficiencies and operational streamlining have also been key factors in enhancing margin performance.

Benchmark analysts have slightly increased their projection for SGHC’s Adjusted EBITDA (AEBITDA) in the first quarter of 2025. This adjustment is attributed to the positive early-quarter trends and the momentum carried over from the fourth quarter of 2024, with current EBITDA standing at $250.2 million. For deeper insights into SGHC’s financial health and additional ProTips, check out the comprehensive research report available on InvestingPro.

The analysts identified core catalysts for SGHC’s continued growth, including ongoing product enhancements in casino and sports betting, refined marketing strategies targeting high-return segments, and sustained brand recognition. These elements are believed to support effective cross-selling across regulated markets.

SGHC is expected to deliver another quarter of solid growth, according to Benchmark, which reinforces their optimistic outlook for the company’s growth opportunities in 2025.

In other recent news, SGHC Limited reported significant growth in its fourth-quarter earnings for 2024, with revenue outside the U.S. increasing by 58% year-over-year to €487 million. The company’s adjusted EBITDA also surged 152% to €129 million, reflecting strong performance in key markets like Africa, Europe, and Canada. Canaccord Genuity responded to these results by maintaining a Buy rating and raising its price target to $11.00, citing SGHC’s strategic marketing and product offerings as key factors in its success. Benchmark analysts also increased their price target for SGHC to $12.00, highlighting the company’s robust financial performance and strategic shift in the U.S. market.

BTIG initiated coverage on SGHC with a Buy rating and a $9.00 price target, acknowledging the company’s strong presence in emerging markets and potential risks from regulatory changes. Despite these risks, BTIG expressed confidence in SGHC’s ability to recover and grow, evidenced by its experience in Ontario. SGHC’s recent launch in Botswana expanded its African footprint, with ongoing focus on growth across the continent. The company also provided guidance for FY25, projecting over €1.9 billion in total group revenue, aligning with market expectations.

SGHC’s management emphasized a disciplined approach to marketing investments and capital allocation, including an increased quarterly dividend, which reflects confidence in future growth. The firm plans to continue focusing on profitable markets and exploring mergers and acquisitions in complementary regions. Analysts from Benchmark and Canaccord Genuity see potential for substantial growth in revenue and AEBITDA for 2025, driven by SGHC’s strategic initiatives and market leadership.

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