With a summer potentially full of regulatory catalysts, Mackie Research Capital analyst Nikhil Thadani thinks now is a good time to be looking at theScore (TSXV:SCR).
In a research update to clients today, Thadani maintained his “Buy” rating and one-year price target of $0.35 on theScore, implying a return of 169 per cent at the time of publication.
Thadani says if catalysts in the United States play out, theScore could have a good summer.
“SCR’s valuation at under $8/user vs. ~$13-20/user range prior to daily fantasy run up in H1 C2015 with an engaged user base (average user opens the app ~3/day consistently in a seasonal sports calendar) provides room for stock value support and appreciation,” the analyst says. “There appears to be industry optimism with regards to positive movement towards US sports betting regulation in the summer, possibly in June. While potential roll out may very likely be on a state by state basis, SCR should be in a position to benefit, especially if the company can introduce potentially innovative products to benefit. SCR’s eSports offering could also possibly benefit from such a move. At the same time, SCR’s cost basis appears stable and cash flow in F2018 (Aug) should improve markedly y/y. Against this backdrop, the stock could benefit over the summer if US catalysts play our as expected.”
Thadani thinks theScore will generate EBITDA of negative $1.9-million on revenue of $27.8-million in fiscal 2018. He expects those numbers will improve to EBITDA of negative $300,000 on a toplin eof $32.4-million the following year.