Mood Media is getting its house in order, says Byron Capital

After watching its share price tumble for more than a year, Byron Capital analyst Rob Goff says Mood Media (Mood Media Stock Quote, Chart, News: TSX:MM) is getting back on the right track.

Last Thursday, the company reported its Q1, 2013 numbers. Mood lost (U.S.) $8.72-million on revenue of $129-million, a topline that was up 54% over the same period a year prior.

CEO Lorne Abony said the company, which in early April initiated a strategic review, is improving rapidly.

“We are accelerating our efforts to realize on the potential of our asset base by integrating our processes, innovating with our products and realigning our sales activity,” he said. “We are working hard on executing more quickly and effectively, and the results are starting to come through. I am more excited than ever about the opportunities in front of us and I believe the best days are still ahead.”

Goff says some heavy lifting remains around Mood Media’s ambitious scale up, but he says the company is working extremely hard to realize shareholder value and improve its operating performance. He says his original investment thesis remains: Mood Media’s legacy audio business is stable and stagnant, but generates free cash flow and a customer list for the more lucrative visual deployments side of the company’s business. In a research update to clients Friday, Goff reiterated his BUY rating and $2.10 one-year price target on Mood Media.

Mood Media came to public attention two years ago when it completed the $345 million acquisition of Muzak, forming an entity that had $400 million in revenue playing in a space that is referred to as sensory branding, a term for multi-sensory marketing tactics now being used by giants such as Nissan, Pizza Hut and Starbucks. The company has inked deals with brands as diverse as Vitamin Shoppe, Hooter’s and Puma.

Goff notes that his forecasts for revenue and EBITDA fall below the company’s own guidance. The company says revenue will fall between $545 and $560-million in fiscal 2013, and EBITDA will be between $120-125-million, the Byron analyst pegs those numbers at $543 million and $115 million, respectively. However, says Goff, additional moves by the company to drive synergies could support stronger EBITDA numbers.

Shares of Mood Media closed today down 4.9% to $1.16.