The value drivers are just beginning to align for NYX Gaming (TSXV:NYX) and investors should soon see another gear for the acquisitive company, says Cantor Fitzgerald Canada analyst Ralph Garcea.
Yesterday, NYX reported its Q3, 2015 results. The company lost $6.49-million on revenue of $13.3-million, a 111.6 per cent bump over last year’s third quarter topline.
“I’m pleased to announce that the third quarter marked another record-breaking quarter for NYX and an important step in our multiyear plan to gain scale and relevance as a diversified high-growth content and technology supplier to the gaming space,” said CEO Matt Davey. “We saw excellent growth in revenue and gross profit and now boast the largest content portfolio combined with one of the broadest distribution bases in the industry with over 170 unique customers.”
Garcea says the third quarter was a solid one for NYX, noting the strong organic growth the company posted, something that is often overshadowed by acquisitions. The analyst says there is some housekeeping to do at NYX before investors can see the new normal at the company.
“We believe EBITDA margins will be impacted in 2015 and 2016 as NYX integrates the Zen, Ongame, Chartwell/Cryptologic, Game360, eGaming and Sportech acquisitions, and we expect margins to improve throughout 2016,” says Garcea. “In addition, we expect Game360, eGaming, Sportech and the Amaya B2B Business to add revenue synergies in 2016 and beyond. We expect Q4/15 to be the first “normalized” quarter post the recent deals.”
In a research update to clients today, Garcea maintained his “Buy” recommendation and one-year price target of $9.00 on NYX Gaming, implying a return of 221 per cent at the time of publication.