DHX Media’s momentum is building, says Euro Pacific’s Goff

Another strong quarter from DHX Media (DHX Media Stock Quote, Chart, News: TSX:DHX.B) has Euro Pacific Canada analyst Rob Goff revisiting his price target.

Last Thursday, DHX Media reported its Q3, 2015 results. The Halifax-based company earned $18.03-million on revenue of $85.58-million, a revenue number that was up 195% over the same period last year.

“In third quarter 2015 we continued to see double- and triple-digit growth across key lines of business translating to record revenues and a sizable jump in earnings per share,” said CEO Dana Landry. “Distribution posted its strongest quarter to date, driven by further global growth in the video-on-demand market. Proprietary production also reported strong revenues, delivering 60 half-hours to our library.”

Goff says he expectations on the quarter were the highest on the street, but notes that even these lofty targets proved too conservative. The analyst said the company’s recent decision to part ways with Disney night now be viewed in a more positive light.

“The results together with management’s comments provided a strong case supporting the Company’s drive to own IP for global content,” said Goff. “Management on the call described the N. American OTTP market as in its middle innings while the larger RoW is just in its early innings. Management characterized industry consolidation as a sign of maturing growth while pointing to the antithesis view of building growth being symptomatic of an industry with emerging players such as the OTTP/SVOD/AVOD markets today. Management pointed to 35 new SVOD platforms that have been launched and announced up 11 for the YTD.”

In a research update to clients Friday, Goff maintained his “Buy” rating, but raised his one year target price from $12.00 to $13.00, implying a return of 38.3% at the time of publication.