GAN Posts Mixed Q2 Results; Shares Drop 8%

Shares of GAN Limited (GAN) dropped almost 8% in Monday’s extended trading session after the company that supplies internet gambling software-as-a-service solutions to the U.S. casino industry delivered mixed second-quarter results.

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The company reported a loss of $0.07 per share, falling two cents short of analysts’ expectations of a loss of $0.05 per share. The company reported a loss of $0.11 per share in the prior-year period.

On a positive note, revenues more than tripled on a year-over-year basis to $34.6 million and exceeded consensus estimates of $31.88 million.

GAN CEO Dermot Smurfit commented, “Most importantly, we made great progress in executing our long-term growth strategy during the first half of the year. This included significant development work in the integration of our new sportsbook engine into our B2B product suite, which we plan to debut at Global Gaming Expo this fall. It also was highlighted by two exciting, exclusive content deals with Ainsworth and Incredible Technologies.”

Smurfit further added, “These efforts and agreements will allow us to grow our take rate from U.S. iGaming revenue and position GAN as a content supplier of choice for large operators with diverse content line-ups.” (See GAN stock charts on TipRanks)

Looking forward, the company reiterated its full-year 2021 revenue guidance. The company forecasts revenues to be in the range of $125 – $135 million, versus the consensus estimate of $129.8 million.

Jefferies analyst David Katz recently initiated coverage of GAN with a Buy rating and a price target of $21 (29.5% upside potential).

Katz favors the stock based on expected growth in online sports betting and iGaming, and the company’s “demonstrated strength as a B2B provider-of-choice, which has a defined TAM of $665 million to $1.1 billion based on our proprietary analysis.”

The analyst further said, “The addition of expanded OSB capabilities through Coolbet and content through Ainsworth continue to bolster the value of GAN.”

Overall, the stock has a Strong Buy consensus rating based on 4 unanimous Buys. The average GAN price target of $26 implies 60.3% upside potential from current levels.