Cryptocurrencies may be in the tank lately but there are still multiple reasons to buy Goldmoney (TSX:XAU) even during the current pullback, says Mackie Research Capital analyst Nikhil Thadani.
The soaring heights of 2017 are turning into a distant memory for cryptocurrencies, which have been on a downward trajectory since early January, having lost about half a trillion dollars in the process. And with its growing stake in cryptocurrency investment, Goldmoney’s share price hasn’t escaped the trend, having lost almost 40 per cent of its value over the past month and currently hovering around the $4.00 mark.
But there’s plenty to be positive about, says Thadani, who sees Goldmoney’s stock benefitting once the prevailing sentiment concerning cryptos improves.
“Overall, we believe crypto assets and blockchain are here to stay, however, continued volatility should be expected in this rapidly developing ecosystem,” said the analyst in a research update to clients Monday.
Thadani rates Goldmoney’s recently released Q3 2017 as positive and calls the company’s launch of GoldMoney China, an agreement with China’s second-largest gold mining company, Zhaojin Mining, a potentially very large catalyst.
“On a gross basis, despite only seven weeks contribution in the quarter and a still evolving product roadmap, crypto contributed ~15 per cent to XAU’s top-line,” says the analyst.
“Crypto and China could accelerate revenue growth. XAU has the wherewithal to execute and also has an increasingly positive management execution track record. XAU’s strong cash position (no debt, ~$60 mln ex. ~$11 mln in GICs) allows the company to continue investing in order to gain critical mass,” he says.
The analyst has revised his estimates on Goldmoney, putting fiscal 2018 revenue at $556.16-million, up from a previous estimate of $509.85-million, and a revised EBITDA of negative $5.1 million, up from a previous negative $5.3 million.
Thadani maintains his “Speculative Buy” rating on Goldmoney, with a one-year price target of $8.25, representing a 103 per cent return at the time of publication.