In a research report to clients today, Thadani initiated coverage of theScore with a “Buy” rating and a one year target price of $1.00, implying a return of 52% at the time of publication.
Thadani says he likes the company’s move into fantasy sports cash games it made with the acquisition of Swoopt and it foray into eSports.
In early February, theScore announced the the release of an app that allows users to follow the world of competitive online gaming, a space sometimes referred to as “eSports”. By downloading the app, which is now available in Google Play and will soon be available on the iPhone, enthusiasts can follow live scoring and breaking news from games such as Dota 2, Call of Duty, League of Legends and StarCraft 2, all of which boast established leagues.
“SCR is currently a mobile advertising play with well credentialed & shareholder aligned management team,” said Thadani. “SCR’s recent capital raise provides the company a war-chest (~$35 mln cash, no debt) for potential M&A (not in our forecast). SCR’s entry into eSports expands addressable market to include the ~70 mln global audience for watching video games with an estimated advertising market of ~US$300 mln/yr by 2018, according to data analytics firm IHS.”
Thadani says theScore currently trades at about $15 per user, which he says is well below most online/mobile advertising plays.