Late Sunday, Aboriginal Australian gaming simple machine Aristocrat Technologies announced it’s purchasing rival Playtech in a $3.71 one thousand million transaction. That values the aim at a 58 percent premium to where it closed last Friday. At to the lowest degree I analyst believes the sell highlights potency opportunity with gaming technology provider GAN Ltd. (NASDAQ:GAN).
B. James Whitcomb Riley psychoanalyst David Bain says the premium Aristocrat is paying to win Playtech, which has a similar concern simulation to GAN, could follow declarative of valuation opportunity with GAN.
We believe the deal further demonstrates scarceness time value of both business-to-business (B2B) engineering and content, highlighting valuation of GAN and a fistful of other B2B/business-to-consumer (B2C) gaming engineering and content suppliers inwards the space, which continues to insure exceedingly wakeless M&A (mergers and acquisitions) activity,” said Bain in a take down to clients today.
The psychoanalyst rates GAN “buy” with a $26 toll target, implying upside of 71 percent from the Oct. 15 close.
GAN Has Scarce Assets
Shares of GAN, which, the like Playtech, makes gaming-related software package that propels iGaming and sports wagering platforms, are off 25 percent year-to-date. But the company’s technological capabilities remain alluring.
That’s regular more dead on target at a time when practically of the consolidation in the online gaming manufacture is revolving around buyers getting their hands on technology to fort their in-house tech stacks. That’s exactly what Aristocrat is doing in acquiring Playtech. The UK-based place makes computer software for net casinos, web-based fire hook rooms, and online sports wagering, and provides software system for fixed-odds colonnade games and online games.
While GAN isn’t yet generating buzz as a possible takeover target, it’s unmortgaged some buyers are pursuing targets for engineering assets. There’s speculation that it’s tech DraftKings (NASDAQ:DKNG) wants inward its overtures toward Entain Plc (OTC:GMVHY). As another example, Bally’s (NYSE:BALY) recent purchases of Gamesys and Bet.Works corroborate gaming operators are keen on perpendicular integrating and want to take tech in-house to actualise cost efficiencies.
As for GAN, its market capitalization of about $640 meg makes it easy digestible for any list of suitors. But the Irish people company hasn’t been directly tied to takeover rumors.
Another Reason to Like GAN
There are no guarantees that a suer testament amount calling for GAN, but B. Riley’s Bain says on that point are other reasons to count the shares, including a lately proclaimed business deal with Red Rock Resorts (NASDAQ:RRR) the investiture biotic community may follow overlooking.
Last week, GAN said it inked an accordance with the casino operator “to build and deploy the substructure for Station’s ‘STN Sports’ online sports platform, nomadic applications, and retail Over-the-Counter and Kiosk-based sports betting throughout Nevada.”
“We trust the accord validates elements of GAN’s Coolbet technology, which will be incorporated into the multiple elements of the deal. Given the RRR agreement was proclaimed late in the daytime (Friday), and non discussed on its Analyst Clarence Day call, we trust it may experience been overlooked by investors,” said Bain.
The analyst raises 2022 and 2023 sales estimates on GAN to $176.2 1000000 and $225.3 million, respectively, from $159.2 million and $187.3 million.