In 2021, esports and online sports betting are red hot. Elys Game Technology (ELYS) stock rose over 43 percent on Aug. 31 and is now up almost 311 percent over the last year. Is it too late to buy ELYS stock or should you add this penny stock to your portfolio?
Elys Game Technology offers online and land-based gaming services in the U.S. and Europe. The Canada-based company provides casino gaming and lottery services.
ELYS stock is rising
ELYS stock rose significantly on Aug. 31 after the company announced that it received a sports betting license for Washington, D.C. Investors seeking growth plays in the gaming sector appreciated Elys' progress in this area. In December 2018, sports betting was legalized in the District of Columbia. Other companies have also entered the market. William Hill is the current sports betting market share leader.
Various gaming stocks, like ELYS, have recently gained popularity among investors. With the surge of online gaming plays like DraftKings, investors who were early to the party have performed well.
ELYS stock’s forecast
According to the data compiled by MarketBeat, ELYS has a consensus target price of $7.91, which is a premium of almost 38 percent over the current prices. The stock is covered by only three Wall Street analysts and all of them have a buy rating. The stock’s lowest target price is $5.72, while its highest target price is $10.
On July 26, Maxim analyst Jack Vander Aarde initiated coverage of ELYS with a buy recommendation and a target price of $10. The analyst anticipates continued growth in Italy and Europe, where ELYS is a well-known and recognized technology brand and sports betting operator. In addition, the company’s recent acquisition of Bookmakers Company immediately bolsters its U.S. strategic plan and should unlock synergies.
Is ELYS stock undervalued?
ELYS trades at an NTM EV-to-sales multiple of 2.5x, which looks attractively priced compared to other gambling stocks. Flutter Entertainment and DraftKings are trading at NTM EV-to-sales multiples of 4.4x and 15.3x, respectively.
It isn't too late to buy ELYS stock.
ELYS has access to sportsbook opportunities in the U.S. in four states thanks to the company’s previous acquisition of Bookmakers. ELYS thinks that the model it created for the Washington, D.C. market might be replicated in several other markets. With this latest win and continued sales growth, Elys might be a penny stock to keep an eye on.
In the second quarter, ELYS reported revenue growth of 143 percent YoY to $11.7 million due to its strong European betting business. The company highlighted that its European operations processed a record $220.1 million in second-quarter betting handle. ELYS expects that certain land-based betting shops will reopen before the start of the 2021–2022 European soccer season, which would provide significant B2C growth in Italy for the rest of 2021.
As of June 30, ELYS had $19 million of cash on its balance sheet. The analysts polled by TIKR expect ELYS’ revenues to rise 36.7 percent and 20.6 percent, respectively, in 2021 and 2022.