Edison Initiates Coverage of 32Red (TTR)

Sep 21, 2016, 10:50 ET from Edison Investment Research

LONDON, September 21, 2016 /PRNewswire/ --

32Red's brand punches above its weight in the UK online casino market. Management has adopted a more aggressive stance since mid-2015, both in terms of marketing and with the highly accretive £8.4m Roxy Palace acquisition. Interims show H116 EBITDA rising to £4.5m (H115: £1.2m) and we initiate with forecast EPS more than doubling in 2016 and growing by over 65% between 2016 and 2018. Yet the 2016e P/E is only 13.5x and our peer group comparison and DCF suggest a value of 193-247p per share, 46-86% above the current share price.

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32Red's 2017e EV/EBITDA is only 6.0x and we believe that investors have not yet recognised the shift in scale and growth momentum that is taking place. Our peer group comparison suggests a share price of 188-198p (average 193p), although the strength of the brand, strong regulated bias and management's track record could justify a greater premium. Our DCF gives 247p.

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For more information please contact: 

Jane Anscombe, Edison Investment Research, +44(0)20-3077-5740 Katherine Thompson, Edison Investment Research, +44(0)20-3077-5730 gaming@edisongroup.com

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SOURCE Edison Investment Research