Goldmoney is undervalued, says Clarus

A rise in share count has Clarus Securities analyst Noel Atkinson readjusting his target price on Goldmoney (Goldmoney Stock Quote, Chart, News: TSXV:XAU), but the analyst is still bullish on the company’s prospects.

Yesterday, Goldmoney (formerly known as BitGold) announced it had completed a previously announced bought deal private placement that will pocket the company $36.63-million.

“Goldmoney welcomes this offer of strategic-institutional funding and the capital entrusted to us by some of the world’s top investment managers,” said CEO Roy Sebag. “With this additional capital, the group is able to strengthen the relationship we have with our customers with an unparalleled commitment to a strong balance sheet through any market environment. We also strive to grow our businesses through new product engineering, the initiation of off-line and more traditional marketing activities, and expansion into additional financial services business lines that will provide operating leverage to our core customer relationships.”

Atkinson says the raise is a little sooner and a little larger than he expected.

“BitGold’s merchant solution – which should become the main driver of user growth and revenue for the Company – has entered the private beta stage,” says Atkinson. “The Company also launched verified user accounts (showing which accounts have had their IDs vetted), added the ability to redeem account holdings into gold coins, and expanded its roster of U.S. and Canadian banks participating in direct deposit/withdrawal (ACH) for linked accounts. Also, GoldMoney completed a $36.6MM equity offering (9.4MM shares @ $3.90/share), which bolstered the balance sheet for marketing and general corporate activities. We had been modeling a $20MM equity raise in the June/16 quarter.”

In a research update to clients today, Atkinson maintained his “Speculative Buy” rating on Goldmoney, but lowered his one-year target price on the stock from $8.75 to $8.50. The analyst said the adjustment was due to the rise in share count.