By cross-selling Casino, Sportsbook and Fantasy Sports into its PokerStars user base, Amaya (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.