Mood Media is a buy, says Euro Pacific’s Goff

Shares of Mood Media (Mood Media Stock Quote, Chart, News: TSX:MM) have been falling for nearly two years, but the company now offers an attractive reward for patient investors, says Euro Pacific Canada analyst Rob Goff.

In a report to clients this morning, Goff initiated coverage of Mood Media with a “Speculative Buy” rating and a one-year target of $0.75, implying a return of 44.2% at the time of publication.

Goff says he expects management can deliver a turnaround that will compensate investors with “aggressive” returns.

“We see 2015 establishing the new service growth, expanding sales distribution capabilities and forming strategic content and distribution partnerships that will be the foundation for sustained growth,” says Goff. “Investments on these fronts are likely to moderate EBITDA growth in 2015. However, initial traction and announced partnerships could positively redefine growth expectations”.

Goff says that in the approximately 15 months since taking over, Mood’s new management team has worked to stabilize the company’s operations, established a plan to drive efficiencies and refinanced (U.S.) $235-million worth of debt. He says the result has been improving ARPU trends and churn back in line with historic levels. The analyst thinks the company’s revamped sales platform will enable it to capture share in the high growth digital and wireless services market.