Gambling.com’s acquisition of business-to-consumer company OddsJam received a thumbs-up from Jefferies Equity Research analyst David Katz in a December 12 investor note. Katz observed that Gambling.com “expects that the acquisition will be immediately accretive to both earnings and margins and expects to grow the business by 20% in FY25.”
Continued the analyst, “We view the deal as a productive tuck-in at a good price with recurring revenues and specific capabilities that enhance long-term value.” Restating a Buy rating on GAMB shares, Katz lifted his price target to $20 per share from $18 apiece.
Under the terms of the deal, shareholders in OddsJam, which breaks down wagering lines for bettors, will receive $80 million ahead of time, including $10 million in Gambling.com stock. Should OddsJam’s cash flow increase 100 percent by 2026, they will be rewarded with an additional $80 million, as much as half of it in the form of stock.
That doubling of OddsJam cash flow may be elusive, based on Katz’s numbers. He projects a 20 percent lift in both revenue and cash flow for the oddsbroker next year, bringing them to $31 million and $14 million, respectively. Gambling.com anticipates a speedy close to the acquisition, as early as January 1.
OddsJam “recommends both arbitrage opportunities and standard bets that it believes offer the player a positive expected outcome,” selling its recommendations to consumers. Katz added that the company has a business-to-business arm that is largely extrinsic to the United States.
“A lot to like,” was Katz’s brief take on the deal. He opined that it was an immediate positive, whereby Gambling.com obtains “relevant growth.” Katz also found shrewdness in the recent repurchase of three million GAMB shares at $10 apiece, stock that will be redeployed at a market value of $15 per share.
Both in OddsJam’s U.S. orientation and its subscription-based business model, Katz discerned an apt broadening of Gambling.com’s abilities as a company. In light of the runup of online sports betting in the states and GAMB’s preponderant orientation toward igaming, he liked the new diversification.
Katz avowed that the takeover had additional value in that OddsJam is plugged into 300 sportsbooks around the world. “The pairing is productive, given the incremental product offering of the target and the distribution of the acquirer,” he added.
In conclusion, Katz justified his raising of his price target by noting that he expected Gambling.com revenues to grow next year, from a previously mapped $142 million up to $173 million. He expected cash flow to rise from $53.9 million to a newly targeted $67.8 million for the combined entities.
