theScore’s Q1 results should scare away the bears, says Mackie

A better than expected quarter has Mackie Research Capital analyst Nikhil Thadani feeling bullish about theScore (theScore Stock Quote, Chart, News: TSXV:SCR).

Yesterday, theScore reported its first quarter, 2015 results. The company lost $3.05-million on revenue of $7-million, up 130 per cent over the $3-million topline the company posted in last year’s first quarter.

“This was the best-ever quarter in theScore’s history,” said CEO John Levy. “We more than doubled our revenue, a direct result of how often fans are now engaging with theScore’s mobile apps. They’re opening us 80 to 90 times a month each on average — and this incredible engagement is driving powerful revenue growth. These results, combined with the continued growth of our eSports platform and the recent launch of QuickDraft, our unique fantasy sports game, has given us a great start to what we expect will be a very exciting 2016.”

Thadani says he was particularly impressed by the company’s performance on user engagement that Levy touched on. He thinks the results will help to dispel the street’s bearish user concerns.

“While we believe Q1 benefitted from seasonality & Jays’ run, we believe ARPU could be baselined higher owing to newer video ad units & increased programmatic ad sales. Q1 supports our thesis that SCR’s value lies in an engaged user base,” says Thadani, adding: “We believe the company could attain EBITDA breakeven, a key milestone, in Q1 (Nov) F2017 if SCR modestly beats our estimates.”

In a research update to clients today, Thadani maintained his “Buy” rating and one-year target price of $1.00 on theScore, implying a return of 223 per cent at the time of publication.