On Thursday, Needham, a financial services firm, raised its price target for SGHC Limited (NYSE: SGHC) to $6.00, up from the previous $5.00, while maintaining a Buy rating on the stock. The adjustment follows SGHC's reported earnings that surpassed expectations for the fourth quarter of 2023 and the company's forecast for the fiscal year 2024.
SGHC's performance in the international iGaming sector was a key driver behind the raised price target, with the company achieving a 32% growth in constant currency terms during the fourth quarter. This growth helped to counterbalance the declines in Online Sports Betting (OSB) resulting from SGHC's strategic exit from the Indian market at the beginning of the fourth quarter of 2023.
Despite anticipating a 35% decline in OSB for the first three quarters of 2024, SGHC has projected a revenue increase of 10% for the entire year. This guidance underscores the company's strong expectations for the iGaming business segment.
In the United States, SGHC is exploring various strategies to develop its asset, which is currently perceived as undervalued in the market, given that the company's shares are trading at approximately seven times Needham's estimated adjusted EBITDA for 2024. The firm believes that reevaluating the U.S. operations could potentially bring additional value to SGHC's consolidated estimates.
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