Amaya’s fourth quarter crushed it, says Cantor Fitzgerald Canada

A better than expected fourth quarter has Cantor Fitzgerald Canada analyst Ralph Garcea feeling bullish about Amaya (Amaya Stock Quote, Chart, News: TSX:AYA).

Yesterday, Amaya reported its fourth quarter and fiscal 2015 results. In the fourth quarter, the company posted adjusted EPS of $0.53 on revenue of $389.5-million.

“Throughout 2015 we successfully executed on our strategy of diversifying our operations while maintaining market dominance in poker,” said CEO David Baazov. “Despite significant foreign exchange and product rollout challenges, we achieved positive growth on a constant-currency basis, and, through investments and initiatives that will continue through 2016, have laid the foundation for becoming a leader across multiple gaming verticals.”

Garcea notes that both Amaya’s top and bottom line “crushed” his and the street’s expectations in the fourth quarter. He says the quarter demonstrates that the PokerStars business is stable and can fuel the companies other efforts.

“We believe the momentum from Q4/15 is sustainable into 2016. PokerStars has 100M+ registered users and ~71% market share,” says Garcea. “The user base should continue to grow leveraging the successful marketing program with Cristiano Ronaldo and Neymar Jr. – with 150M+ and 120M+ social media followers, respectively. In addition, the revamping of the poker VIP system to focus more on the engagement of recreational players is working – as net deposits have increased y/y and new players’ deposits are lasting longer. This in turn is fuelling the growing casino business, and should support the emerging sportsbook.”

In a research update to clients today, Garcea maintained his “Buy” recommendation and (C) $45.00 one-year target price on Amaya, implying a return of 142 per cent at the time of publication.

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