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Mackie cuts price target on theScore, maintains “Buy” rating

Score Media and Gaming

 

Score Media and Gaming
theScore Chairman and CEO John Levy.

Mackie Research Capital analyst Nikhil Thadani says he was too optimistic about theScore’s (theScore Stock Quote, Chart, News: TSXV:SCR) fourth quarter.

This morning, theScore reported its fourth quarter and fiscal 2016 results. In its Q4, the company lost $5.16-million on revenue of $4.98-million, a topline that was up 70 per cent over the $2.9-million in revenue the company generated in the same period last year.

“In just three years we have more than quadrupled our annual revenue, doubled in-app engagement and firmly established theScore as a leader in mobile sports in North America,” said CEO John Levy. “We’ve built out a best-in-class team that’s committed to achieving audience, engagement and revenue growth across our mobile apps, while also expanding our brand presence across established — and emerging — digital platforms to ensure theScore is reaching sports fans wherever they are. We remain on track to deliver on our long-term vision of making theScore a profitable and self-sustaining business and we are excited by what the future holds.”

Tribe

Thadani notes that the quarter fell below his topline expectations of $5.9-million and the street consensus of $5.6-million. He detailed the culprits of the softness.

“We expected higher monetization benefit from the Olympics and a busier sports calendar this summer, which was too optimistic,” says the analyst. “EBITDA was a loss $3.6 mln (ex. stock compensation), in-line with our estimate and slightly better than consensus loss ~$4.1 mln despite the revenue miss, mostly due to lower personnel and marketing costs. SCR ended Q4 with ~$15.5 mln cash (or ~5¢/sh) vs. our ~$14.5 mln estimate. SCR expects to collect a ~$5 mln tax receivable around Q2 (Feb) F2017.”

In a research update to clients today, Thadani maintained his “Buy” rating, but cut his one-year price target on the stock from $0.80 to $0.50, implying a return of 138 per cent at the time of publication.

Thadani thinks theScore will generate an EBITDA loss of $7.6-million on revenue of $26.8-million in fiscal 2017. He expects these numbers will improve to positive EBITDA of $2.0-million on a topline of $37.7-million the following year.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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