theScore gets price target lowered at Euro Pacific

After posting its fourth quarter results yesterday, Euro Pacific analyst Rob Goff is still bullish on theScore (theScore Stock Quote, Chart, News: TSXV:SCR), just a little less so.

On Tuesday, theScore reported its Q4 and fiscal 2015 results. In the fourth quarter, the company lost $4.62-million on revenue of $2.9-million, an uptick of 63 per cent over the same period a year prior.

“Our audience continues to grow and they’re coming back to us more often too, as our strong session growth demonstrates,” said CEO John Levy. We’re forging a deeper connection between sports fans and our mobile products by creating powerful engagement that helped achieve strong revenue during a quarter that’s traditionally quieter in terms of major sports leagues and competitions. Combined with the first major user milestone for our eSports platform, the imminent relaunch of our fantasy sports offering as well as the huge strides we’re making in our mobile advertising business and theScore is perfectly placed to continue reinforcing our position as a true leader in mobile sports in fiscal 2016.”

In a research update to clients today, Goff maintained his “Buy” rating on theScore, but lowered his one-year price target on the stock from $1.05 to $.90, implying a return of 195.1 per cent at the time of publication. Goff says iffiness around timing and regulation of the company’s forthcoming Daily Fantasy Sports option were part of the reason for the revision.

“We felt that a $0.15 PT reduction was appropriate given the uncertainty overhanging DFS and considering capital market moves,” he said. “We continue to believe that the traditional sports app franchise is significantly undervalued at current levels leaving eSports and, we believe, eventually DFS to drive significant upside. We believe the DFS will develop into a significant value contributor given its direct subscriber, content and advertising overlap with the traditional sports app. We believe greater clarity on DFS regulations, theScore’s DFS plans, and growth in the traditional sports apps users and user sessions will support a recovery in valuation considerations. Our revised $0.90 PT reflects a harsh 20% discount rate leaving room to return to prior valuation considerations.”