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On Monday, Stifel analysts maintained their Buy rating on Codere Online Luxembourg S.A. (NASDAQ:CDRO), currently trading at $8.00, with a consistent price target of $10.00. The stock has shown impressive momentum with a 24% gain year-to-date, according to InvestingPro data. The company’s first-quarter net gaming revenue (NGR) showed a modest increase of 2%, surpassing expectations, although its adjusted EBITDA fell short of consensus due to strategic user acquisition and technology investments. Despite the challenges, including a further devaluation of the Peso, management reaffirmed their revenue and adjusted EBITDA forecasts for fiscal year 2025.
Codere Online’s performance varied across its primary markets. The company maintains an impressive gross profit margin of 90.4%, as reported by InvestingPro. In Spain, the company faced deceleration due to heightened competition and increased promotional activities, while in Mexico, the firm saw growth, attributed to successful user acquisition strategies and a reduction in competition after the Copa América. The company anticipates a boost in NGR during the second half of 2025 as foreign exchange and promotional headwinds in Spain are expected to subside.
During the quarter, Codere Online demonstrated financial discipline and confidence in its future cash flow by repurchasing $0.5 million of its shares. According to InvestingPro, the company maintains a strong financial position with more cash than debt on its balance sheet. The remainder of fiscal year 2025 presents potential challenges with rising competition expected in the lead-up to the World Cup and subsequent regulatory changes in Spain. However, the analysts noted the total addressable market (TAM) growth remains robust in Codere Online’s core markets. The company’s resilience in market share is supported by its omnichannel approach and the complex nature of the markets it operates in.
In light of the recent financial report, Stifel has adjusted its model for Codere Online, slightly increasing the projected NGR for 2025 by 1%. The firm’s target price for the company’s stock remains unchanged at $10, signaling confidence in Codere Online’s strategic investments and market position. For deeper insights into Codere Online’s valuation and growth prospects, including additional analyst targets ranging up to $14, access the comprehensive Pro Research Report available exclusively on InvestingPro.
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