GNOG Inventory Has Double, Triple Potential, Says Jefferies’ Katz


Posted on: April 13, 2021, 08:10h. 

Final up to date on: April 13, 2021, 08:55h.

Golden Nugget On-line Gaming (NASDAQ:GNOG) inventory isn’t getting the adulation it deserves, and the identify may doubtlessly ship huge returns — maybe doubling or tripling, as market individuals acknowledge development provided by on-line casinos.

GNOG stock
Tilman Fertitta in a CNBC interview final month. An analyst thinks his Golden Nugget On-line Gaming may soar. (Picture: CNBC)

These are the emotions of Jefferies analyst David Katz, who’s lately been bullish on the web gaming identify. He reiterates a “purchase” ranking on Golden Nugget On-line with a $28 value goal — properly above the $15 space at which the shares reside right now.

We imagine the Avenue’s shifting focus to the deserves of iGaming from on-line sports activities betting is underappreciated, and as proliferation evolves, GNOG’s positioning must be higher mirrored within the shares,” Katz stated in a word to purchasers.

The analyst waxed bullish on Tilman Fertitta’s web on line casino operator final week, however his newest take signifies a transfer to $28 by GNOG is extra of a base case. In an especially bullish state of affairs, Katz believes the inventory can surge to $45, or triple its present value. The consensus value projection amongst Wall Avenue analysts is $24.

GNOG Inventory Requires Lengthy-Time period View

Equities sometimes don’t double in speedy vogue, and the street to a triple is even longer. Plus, GNOG has to shake out of a hunch earlier than it could earnestly flirt with the lofty value estimates set forth by Katz.

The corporate went public final December following a merger with a particular objective acquisition firm (SPAC) co-owned by Fertitta and Jefferies. Yr-to-date, the shares are off 23.25 p.c, and that’s with the advantage of a 9.64 p.c rally over the previous week.

A part of that sluggishness might be attributable to buyers prioritizing names with heavier on-line sports activities betting publicity over on-line casinos. Nevertheless, the latter provides its personal favorable development trajectory. Goldman Sachs lately stated it believes web gaming might be a $14 billion business in 2033, up from $1.5 billion right now.

Particular to GNOG, the corporate is already worthwhile, holds dominant market share in New Jersey, and lately forecast 2020 gross gaming income (GGR) development of roughly 67 p.c.

Katz, the Jefferies analyst, says New Jersey highlights the efficacy of the iGaming funding thesis — one that provides higher margins and better participant lifetime worth relative to sports activities wagering, resulting in superior returns on invested capital for operators.

Nascent Indicators of Momentum for GNOG

Broadly talking, Jefferies is optimistic on the web gaming universe, together with casinos and sports activities wagering. The analysis agency’s lately up to date digital gaming model matrix signifies there was incremental enchancment in March in comparison with February, and that long-term momentum stays “strong.”

Related to GNOG inventory, the financial institution believes income will pattern greater in significant vogue.

“Whereas the corporate is prioritizing iGaming over sports activities betting roll out, we’ve seen elevated strong momentum in March, favoring our assumptions of top-line acceleration,” stated Jefferies.

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