theScore has triple-digit upside, says Mackie

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

theScore yesterday reported its Q3, 2016 results. The company lost $4.44-million on revenue of $6.1-million a topline that was up 94 per cent over the $3.2-million in revenue the company posted in the same period last year.

“This quarter saw us continue to achieve impressive revenue growth, broaden our esports coverage and also expand theScore experience to messaging platforms, becoming the first sports media company to launch a chatbot for Facebook Messenger,” said CEO John Levy. “We believe the emergence of chatbots has the potential to be transformative in the way people consume content on their mobile devices. As sports fans discover new ways to follow their favourite teams, leagues and players, theScore will be there with them, delivering our unique brand of highly personalized and engaging sports content to millions on these emerging platforms.”

Thadani notes that theScore’s core advertising revenue has doubled, year-over-year, and says the company would be EBITDA positive if not for new product initiatives. But he says at least one of these initiatives could be a real catalyst for growth.

“Catalysts to unlock value in engaged user base could be lurking just below the surface,” says the analyst. “For example, we speculate that perhaps strategic players could take a stake in SCR’s eSports product, which could accelerate SCR EBITDA break even. We suspect such an approach could be a positive valuation catalyst. Some gaming companies have benefited from a similar approach. Aggressive marketing promotions/contests centered targeted around major sporting events could accelerate user growth, which could likely be rewarded by investors focused on y/y user growth.”

In a research update to clients today, Thadani maintained his “Buy” rating and one-year price target of $0.80 on theScore, implying a return of 191 per cent at the time of publication.