Mogo under four bucks looks cheap, says Mackie Research

A dip under the four dollar mark has Mackie Research Capital analyst Nikhil Thadani saying it’s a good time for investors to pick up some shares of Mogo Finance Technology (Stock Quote, Chart, News: TSX:MOGO).

On June 6, Mogo closed a $15-million debenture offering. Placees included Difference Capital’s Michael Wekerle, Boston Pizza owner Jim Treliving, Club Monaco and Joe Fresh founder Joe Mimran, Minhas Breweries co-owner Manjit Minhas, and Michele Ronanow, the co-founder of Buytopia.ca.

Subsequent to the financing news, shares of Mogo raced to a high close of $4.39 the following day, but have since pulled back, closing today at $3.87. Thadani says that is a good entry point.

“We believe Mogo stock does not reflect recent positives including the closing of the $15 mln 10% convertible senior debenture financing announced after market close Jun 6th,” says the analyst. “As Mogo delivers q/q revenue growth in H2/17, we expect valuation to benefit. We expect investors to give Mogo increasing credit as a revenue growth story once the company demonstrates revenue growth inflection. On a 2018 basis, Mogo trades at ~2.0x net sales vs. FinTech names at an average ~3.9x (unchanged with recent market volatility).

In a research update to clients today, Thadani maintained his “Speculative Buy” rating and one-year price target of $6.00 on Mogo, implying a return of 52 per cent at the time of publication.

Thadani thinks Mogo will post EBITDA of $600,000 on revenue of $47.6-million in fiscal 2017. He expects those numbers will improve to EBITDA of $8.3-million on a topline of $69.6-million the following year.

Many of those closest to the company are heeding Thadani’s advice. Several Mogo insiders, including CFO and director Greg Feller, have made purchases of the stock in the open market in the days since the debenture financing closed.