NYX Gaming has 121% upside, says M Partners

M Partners analyst Steven Salz is more optimistic than the street about NYX Gaming’s upcoming fourth quarter results.

On April 25, NYX Gaming will report its fourth quarter and fiscal 2016 results. Salz expects the company will generate fully diluted EPS of -$0.01 and EBITDA of $15.1-million on revenue of $55.6-million in the fourth quarter. His take is slightly more optimistic than the street consensus of EPS of -$0.02 and EBITDA of $14.3-million on a topline of $55.5-million.

Salz says this is an important quarter for NYX Gaming for one reason in particular.

“This quarter is the first quarter fully divested from the company’s Ongame poker segment where loss mitigation is expected to help improve EBITDA margin,” he notes. “Ongame was a non-core B2B poker platform, where losses have continually dragged down EBITDA. The divestment is consistent with the company’s strategy to shift its focus towards industry growth segments of casino gaming and sportsbook, and away from sluggish poker. This is a central theme behind our thesis on NYX.

In a research update to clients today, Salz maintained his “Buy” rating and one-year price target of $2.50 on NYX Gaming, implying a return of 121 per cent at the time of publication.

Salz believes NYX will post Adjusted EBITDA of $44.9-million on revenue of $164-million in fiscal 2016. He expects these numbers will improve to EBITDA of $78.6-million on a topline of $232.4-million the following year.

Salz says investors can profit from what he sees as a disconnect between the value in NYX and its current share price.

“At current levels we believe NYX is oversold due to negative industry sentiment and the misunderstood acquisition of OpenBet. We believe the market is effectively pricing in zero synergy realization from the OpenBet acquisition,” he says.

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