NYX Gaming keeps beating our expectations, says M Partners

Another quarter that bested street consensus expectations is more proof that NYX Gaming (NYX Gaming Stock Quote, Chart, News: TSXV:NYX) is undervalued, says M Partners analyst Steven Salz.

Yesterday, NYX Gaming reported its Q1, 2017 results. The company earned $2.52-million on revenue of $58.9-million, a topline that was up 199.8 per cent over the same period last year.

“With our new operating model in place, we’re pleased to report growth in revenue and adjusted [earnings before interest, taxes, depreciation and amortization] from the prior quarter and the prior-year period,” said Matt Davey, chief executive officer of NYX Gaming Group. “Our customer development pipeline remains strong, and we are focused on profitable growth through our product-led strategy with targeted [research and development] investment in sports book, gaming and content technologies.”

Salz notes that NYX’s quarter bested his expectation of EBITDA of $15.7-million (EBITDA was $16.8-million) on revenue of $57.5-million and the street consensus of EBITDA of $15.8-million on a topline of $58.2-million. The analyst says this is becoming a trend.

“The company has now delivered revenue ahead of consensus estimates for the last nine out of ten quarters,” he notes. “Organic revenue growth is also tracking ahead of expectations at 17.3% in the quarter, excluding the impact of OpenBet. We note that this compares favorably to recent peer reported growth rates of 10% – 20%, and the annual industry growth of ~10%.”

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 134 per cent.

Salz thinks NYX will generate Adjusted EBITDA of $75.3-million on revenue of $243.5-million in fiscal 2017.

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