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Amaya has clear path to $2 billion in revenue by 2017, says Cantor

Amaya Gaming CEO David Baazov. Cantor Fitzgerald Canada analyst Justin Kew says a soft Q4 and a lack of guidance will bring short term uncertainty to the company's stock, but long term catalysts remain.
Amaya Gaming CEO David Baazov. Cantor Fitzgerald Canada analyst Justin Kew says a soft Q4 and a lack of guidance will bring short term uncertainty to the company's stock, but long term catalysts remain.
Amaya Gaming CEO David Baazov.

By cross-selling Casino, Sportsbook and Fantasy Sports into its PokerStars user base, Amaya (Amaya Stock Quote, Chart, News: TSX:AYA) has a clear path to two-billion dollars in revenue by 2017, says Cantor Fitzgerald Canada analyst Ralph Garcea.

In a research update to clients today, Garcea maintained his “Buy” rating and one-year price target of $50.00 on Amaya, implying a return of 82.6% at the time of publication.

Garcea notes that since last June, when Amaya completed the transformational $4.9-billion acquisition of the Oldford Group, which owned the PokerStars and Full Tilt Poker brands, the PokerStars user base has climbed to 91-million from 85-million. The analyst expects this number will reach 100-million by the end of this year.

Garcea thinks growth will come from the company’s Sportbook, which it launched in March, and from the Fantasy Sport segment, which it expects to launch by the beginning of the next NFL season.

“We believe both Sportsbook and Fantasy Sports are ideal markets to cross-sell into the PokerStars base – and vice versa; especially from a “discretionary wallet management” perspective (move all accounts under one PokerStars wallet),” said Garcea. “The new PokerStars-branded prepaid MasterCard® launched by SafeCharge that allows poker players in the UK to withdraw and deposit direct to their bank account is aligned with this one-wallet strategy.”

In mid-May, Amaya will report its Q1, 2015 results. Garcea expects the company will post adjusted EBITDA of $143.6-million on revenue of $351.9-million.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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