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Investing.com - Roth/MKM initiated coverage on DoubleDown Interactive Co Ltd. (NASDAQ:DDI) with a Buy rating and a $16.00 price target on Monday. According to InvestingPro data, the company maintains strong profitability with a 70% gross margin and trades at an attractive P/E ratio of 3.7x.
The research firm identified DoubleDown Interactive as an "attractive special situation" with potential for significant value unlock in the coming quarters, according to its analysis.
Roth/MKM noted that the company currently holds $8.50 per share in net cash on its balance sheet, representing approximately 97% of its market capitalization, and projects this figure will exceed $10 per share by the end of 2025.
The firm highlighted the stock’s current valuation at 0.1x its 2025 estimated EBITDA, which it described as "anemic" and "well below its peers" in the gaming sector.
Roth/MKM suggested that potential cash deployment through acquisitions or capital returns, combined with improved share liquidity, could drive multiple expansion for the stock in the future.
In other recent news, DoubleDown Interactive Co., Ltd. announced the pricing of an underwritten secondary offering of 4,347,827 American Depositary Shares (ADSs) at $8.50 per ADS. The offering is conducted by the selling shareholder, STIC Special Situation Diamond Limited, and consists entirely of existing shares, meaning DoubleDown Interactive will not receive any proceeds from this transaction. Each ADS represents 0.05 common share of the company, and underwriters have been granted a 30-day option to purchase up to 652,173 additional ADSs at the same price, less underwriting discounts and commissions. Roth Capital Partners (WA:CPAP) is leading the offering as the Lead Bookrunning Manager, with Texas Capital Securities acting as Co-Bookrunning Manager. The transaction is expected to close around June 13, 2025, subject to customary closing conditions. The announcement follows a shelf registration statement filed with the SEC on September 14, 2022, which was declared effective on September 27, 2022.
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