Look for WOW Unlimited Media (TSXV:WOW.A) to push forward on its growth through acquisitions strategy, says Rob Goff of Echelon Wealth Partners. In a client update on Wednesday, the analyst maintained his “Speculative Buy” rating and 12-month $3.00 target for WOW.
Earlier this week, children’s animation and media company WOW Unlimited announced the completion of a non-brokered private placement which raised $2.36 million for the company at $1.50 per share.
Goff says that the cash adds to the $4.0 million the company reported in its FQ1/18 financial results, delivered on May 30.
“We are encouraged by the company’s access to capital,” says Goff. “We look for the company to potentially raise additional funds in the future as growth through acquisitions is part of its strategic mandate. Furthermore, we consider the potential for WOW to accelerate content development given its success to date and the growth of Frederator.”
Frederator Networks, the multi-channel animation network that joined with Rainmaker Entertainment in 2016 to form WOW, recorded 5.4 billion views over Q1, a quarter-over-quarter increase of 25 per cent and a year-over-year increase of 258 per cent.
Goff says he’ll be looking for 20 per cent quarterly growth in Q2 and has estimated the company’s CPM (cost per thousand) at $1.00 for the remainder of the year.
In its Q1, WOW reported revenue of $15.7 million and an EBITDA of $1.6 million.
Goff points to a number of catalysts for 2018, including Netflix’s renewal of WOW’s Castlevania for a third season, more buildout of the Frederator network (including a potential commission by Sony), more traction from the company’s telecom partnerships, the acquisition of more intellectual property and the launch of WOW’s own channel, pending CRTC licence approval.
Goff expects WOW to generate revenue and Adj. EBITDA in 2018 of $56 million (was $54 million) and $1 million (was $2 million), respectively. His $3.00 target represents a projected return of 100 per cent at the time of publication.