Eight Capital analyst Adhir Kadve is boisterous in his support of BRAGG Gaming (Bragg Gaming Stock Quote, Chart, News TSXV:BRAG), maintaining a “Buy” rating and $12/share target price for a potential one-year return of 80.2 per cent in an update to clients on Monday.
Kadve’s valuation is based on a 2x EV/Sales multiple for the 2023 fiscal year, which he anticipates will become more in line with its peer group on account of ongoing execution of key strategic initiatives and improving product mix, leading to higher margins.
Founded in 2004 and headquartered in Toronto, BRAGG Gaming offers turnkey solutions for retail, online and mobile iGaming platforms, as well as casino content aggregator, sportsbook, lottery, marketing and operational services.
Kadve’s latest update comes after BRAGG made a change at the top, naming Yaniv Sherman as its new Chief Executive Officer as of July 1.
“The hiring of Mr. Sherman adds a chief executive to lead the company who has significant experience in the US market, thus we think the hire makes strategic sense, as we believe that the US could become a key growth market for the company,” Kadve said.
In Sherman, BRAGG Gaming Group brings on an executive with 20 years of experience in the global iGaming business, including 15 years of experience in senior leadership roles. Most recently, Sherman served as SVP, Head of US for 888 Holdings, a major international iGaming company, from 2018 through 2021 after previously serving in leadership roles in Business Development and Sales, as well as Commercial Development.
The announcement is the culmination of a seven-month search following the resignation of previous CEO Richard Carter, with company chairman Paul Godfrey serving in the role on an interim basis in that time.
“Bragg’s business momentum reflects consistent execution on its strategic growth initiatives, including its successful entry into new European regulated iGaming markets since the beginning of 2021,” Sherman said in a June 13 press release. “In addition, the recent additions of the Spin Games and Wild Streak Gaming studios represent an attractive opportunity for growth and continued expansion of Bragg’s offerings in the North American market, as they integrate their content, products and services with the core Bragg team and platform to offer a differentiated, best-in-class online gaming proposition to existing and future partners.”
Since the Sherman announcement, BRAGG Gaming Group has also announced that a few of its titles from exclusive slots portfolio are now available to customers of SkillOnNet’s SpinGenie, PlayOjo and SlotsMagic casino brands in Ontario, including offerings from its in-house studio, Atomic Slot Lab, as well as other exclusive titles curated by ORYX Gaming.
Overall, Kadve believes Sherman’s appointment makes a lot of sense for the company.
“With the closing of the Spin acquisition two weeks back, in our view, the US market can become a significant driver of growth for Bragg through the end of this year and into the future given that the growth of iGaming (i.e. online casinos) in the US is in its early-days,” Kadve said. “Thus, we think that Mr. Sherman’s experience in the US market will serve Bragg well as it looks to ramp up its expansion in the US market.
BRAGG Gaming Group has seen green in 2022 with a 3.4 per cent return on investment to date, though it has dropped off by 33.9 per cent since hitting an early peak of $9.80/share on February 10.
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