Amaya Gaming is still undervalued, says Cantor Fitzgerald

Cantor Fitzgerald analyst Tom Liston says Amaya Gaming’s (Amaya Gaming Stock Quote, Chart, News: TSXV:AYA) Q1 was just OK, but better things lie ahead for the company.

Yesterday, Amaya reported its Q1, 2013 financial results. The company lost $7.44-million on revenue of $38.05-million, up from just $6.38-million in the same period last year. The company lost $4.55-million in that quarter.

In the press release accompanying the numbers, CEO David Baazov underscored the company’s larger objective.

“Gaming jurisdictions are moving toward regulatory frameworks that are evolving to adapt to the convergence of both interactive and land-based gaming operations,” he said. “We are well positioned to capitalize on this evolving regulatory framework due to our technology, regulatory status and strategic partnerships.”

“Additionally,” said Baazov, “we are continuing to integrate the acquisitions we made in 2012, including Cadillac Jack and Ongame.”

Liston says the quarter fell within his expectations, but that Amaya’s guidance was “robust”. Amaya’s valuation is well supported at it current levels, he says, but the company has several upcoming catalysts that could send its share price north.

These include Cadillac Jack’s entry into the Class 3 slot-machine market (which comprises 95% of all units in the United States), that division’s growth in areas where it has recently won licenses, including California and Florida, and the growing pipeline of the company’s recently acquired online poker network, Ongame. In a research update to clients this morning, Liston reiterated his BUY rating and $9 one-year target on Amaya Gaming.

Regarding Ongame, Liston says the impact of the U.S. legislating and taxing online poker will be material. He estimates that the gross revenue to online poker operators could be as much as $3.8-billion.

Shares of Amaya Gaming closed today down 3.14% to $6.17.

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