Some weakness in the stock due to lock up expiration from its August financing is a great entry opportunity for investors to load up on KuuHub (TSXV:KUU), Echelon Wealth Partners analyst Ralph Garcea says.
This morning, KuuHub announced it had established operations in Tokyo, positing that it has a great opportunity in Japan, particularly targeting mobile gamers who are female.
“Mobile gaming in Japan keeps gaining momentum and, after strong growth in North America, the Japanese market is a natural first Asian expansion for Kuuhubb. While the male gamer segment is excessively competitive, female mobile gaming and lifestyle app usage provide very attractive opportunities,” stated Jouni Keranen, chief executive officer of Kuuhubb.
Garcea says KuuHub is cheap compared to its peers.
“We believe there is plenty of upside in our estimates as KUU expands across demographics and into adjacent lifestyle categories (like interior design, fashion and jewelry, home and garden, etc),” the analyst says. “We note that the Global Social App comparables are trading on average (excl. FB) at a multiple of $55/MAU. Applying this multiple to KUU’s 6.3M MAU would value KUU at $347M (or C$7.00-8.00/shr).”
In a research update to clients today, Garcea maintained his “Speculative Buy” rating and one-year price target of $4.00 on KuuHub, implying a return of 176 per cent at the time of publication.
Garcea thinks KuuHub will generate EBITDA of $3.7-million on revenue of $24.6-million in fiscal 2018. He expects those numbers will shift to EBITDA of $3.4-million on a topline of $35.2-million the following year.