Cherry: ComeOn not yet fully discounted

Research Update

2016-08-31

12:29

Cherry’s Q2 report was in line with our estimates with only minor deviations. The market investment within Cherry iGaming was higher than anticipated which also affected the profitability. However, we take this margin dip with ease as the marketing campaigns will boost growth in coming quarters. Yggdrasil continues their impressive performance and beat our forecast on all counts. Cherry disclosed financials for ComeOn (not consolidated in the Group numbers or forecast) during H1. ComeOn performed well and in line with our estimates. We argue that the market still underappreciates the growth journey that lies ahead for Yggdrasil and that the value of ComeOn is yet to be fully discounted in the share price. We raise our estimates in Base-case, which generates a new Estimated Fair Value per share of 230 (215) SEK. We find downside risks as relatively limited as the stock trades only 15% above our Bear-case valuation of 130 SEK per share.

KL

Kristoffer Lindström

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